The dollar rallied against all major reserve currencies to a five-week high on Tuesday as the House reached a two-year deal to lift the debt borrowing ceiling.
The news of a political deal on the debt was coupled with positive news for earnings, with Coca-Cola, United Technologies, Visa, Snap Inc, and Texas Instruments delivered strong beats and solid outlooks.
To the contrary, the euro weakened against the dollar to its lowest point since May, as markets prepare for fresh stimulus from the European Central Bank. The Euro also lost ground in response to Commissioner Malmstrom’s threat to raise EU tariffs on US goods, a sign that a second front in the global trade war may be unavoidable.
The British pound also fell to a 27-month low against the dollar following the election of Boris Johnson, who has promised to leave the EU even without a deal by October 31.