US Dollar Index juggles above 103.20 as US Biden-McCarthy meeting ends without agreement

The US Dollar Index (DXY) is consolidating in a narrow range above the immediate support of 103.20 in the early Asian session. The asset is expected to remain on tenterhooks as investors are awaiting the outcome of face-to-face negotiations between US President Joe Biden and House of Representatives Kevin McCarthy over the United States debt-ceiling issues.

S&P500 futures have added significant gains in the Asian session after a choppy Monday, portraying a quiet market mood.

US Biden-McCarthy negotiations over raising US borrowing cap

Investors were keeping an eye on the jaw-dropping event of face-to-face negotiations between US Biden and Speak McCarthy over raising the US borrowing cap to save the United States economy from a default. Positive development over the approval of the US debt-ceiling raise as Speaker McCarthy cited early Tuesday that we will have a deal improved market sentiment. However. the meeting has ended without an agreement on raising the US borrowing cap.

Meanwhile, US Biden is looking to officially announce the 72-hour rule under which he will wait for 72 hours and will make an immediate reaction after that.  It seems that negotiations between parties are expected to remain heated as both are not comfortable with partisan terms made.

Caution over the US debt-ceiling has supported US Treasury yields further. The yields offered on 10-year US government bonds have jumped to near 3.72%.

Fed policymakers’ mixed views on interest rate guidance

While Minneapolis Federal Reserve (Fed) Bank President Neel Kashkari and Atlanta Fed Bank President Raphael Bostic remained in favor of holding interest rates steady in June, St. Louis Fed Bank President James Bullard said on Monday that the Fed wants to fight inflation amid a strong labor market. He further added that the policy rate will have to go higher this year, perhaps by 50 basis points (bps).

Apart from them, Fed chair Jerome Powell cited on Friday that tight credit conditions by the US regional banks have allowed them to keep interest rates steady as lower credit disbursals are keeping a check on US inflation.