Fed set to raise rates to limit dollar losses

In the Asian session on Tuesday (May 30), the U.S. dollar index fell back from a high, with the latest price of the U.S. dollar at 104.24, a drop of 0.04%. Expectations of further rate hikes by the Federal Reserve should keep the dollar strong, limiting losses, analysts said, even as a debt-ceiling deal between U.S. President Joe Biden and House Speaker McCarthy dampened safe-haven demand.

The latest from the Federal Reserve:

Analysts said: “We suspect that this (debt ceiling agreement) may not be enough to significantly reduce the strength that the dollar has shown in the past few weeks.” The possibility of rate cuts in late 2023 and early 2024, “that could continue to support the dollar.”