US debt weighs on the dollar to a two-week high; pound sags

LONDON (Reuters) – The US dollar hit a two-week high against rivals on Tuesday after US President Donald Trump and congressional leaders agreed Monday on a two-year extension of the ceiling. of debt, thus dispelling fears of a government default later this year.

The greenback rose 0.24% against a basket of rivals .DXY at 97.47, its highest level since July 10th.

"This eliminates the threat of a new debt ceiling drama for two years, during which time many of us hope that a set of rational politicians will have taken office and that this useless recurring drama will be eliminated, "said Marshall Gittler, chief strategist at ACLS Global.

The New Zealand dollar NZD = D3 was the biggest loser after Bloomberg News announced that the country's central bank was updating its strategies for unconventional monetary policy.

The euro EUR = EBS also fought against the dollar, but maintained its highest level in two years against the weak Swiss franc against growing concerns that the Swiss National Bank could intervene to weaken the currency.

If the levels lower than 1.10 francs per euro are considered as an intervention territory, the SNB's data on demand deposits, virtually unchanged, the clearest indicator of purchases of francs by the Swiss central bank, indicate that the authorities do not worry unduly about the strength of the Swiss currency for the moment.

Dollar gains have been capped in a broad-based money market as investors wait for the results of the European Central Bank and the US Federal Reserve's policy meetings in the coming days.

While the ECB is widely expected to announce an accommodative policy at Thursday's meeting, the Fed is expected to cut interest rates by a quarter of a point next week.

The pound was the other big loser at the start of the day in London, with the British currency sliding towards the average of GBP 1.24, GBP = D3, ahead of the results of the Conservative leadership race. Boris Johnson is expected to win and replace Premier Theresa May.

Concerns that Britain would pull out of the European Union without an agreement grew after Johnson announced that he would take her out of the European Union on Oct. 31 "dead or dead" .

The GBP = D3 pound is trading at $ 1.2459, a level close to the 27-month low of 1.2382 reached last week.

"Johnson should become the new Prime Minister, so there is a good chance Brexit is difficult," said Takuya Kanda, general director of research at the Gaitame.Com Research Institute in Tokyo.

(CHART: Intervention of CHF and SNB – tmsnrt.rs/2OcUYTm)