Dollar firms on optimism over US debt ceiling talks, Aussie down after jobs data

The U.S. dollar held near a seven-week peak on Thursday, after President Joe Biden and top U.S. congressional Republican Kevin McCarthy worked towards avoiding a damaging debt default, while the Aussie dollar slipped after disappointing jobs data.

Biden and McCarthy on Wednesday underscored their determination to strike a deal soon to raise the government’s $31.4 trillion debt ceiling, having agreed a day earlier to negotiate directly after a months-long standoff.

While the upbeat meeting helped calm fears of an unprecedented American debt default, a cautious air tempered risk-taking.

U.S. Treasury yields remained elevated in early Asia trade after having risen in the previous session, as investors sold off the safe-haven bonds in the wake of the positive signs on the debt ceiling negotiations. Yields rise when bond prices fall.

The pop up in treasury yields helped lift the U.S. dollar. Against a basket of currencies, the dollar index firmed near its seven-week peak hit in the previous session, and last stood at 102.86.

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