Markets were mixed in the wake of the agreement to raise the US debt ceiling, as the dollar stabilized and gold fell, while oil rose, amid anticipation of interest rate decisions and movements of the "OPEC Plus" group.
The dollar maintained its relative stability on Monday, amid growing expectations that the Federal Reserve will raise interest rates despite news of a debt ceiling deal that has kept some hedging people away from the greenback.
The dollar index, which measures the value of the greenback against some major foreign currencies, fell slightly to 104.1 points, yet remained near last week's two-month high of 104.42 points.
The dollar hit a six-month high against the Japanese currency at 6.140 yen in early Asian trade before reversing some of those gains.
The dollar is heading for monthly gains of around 3% against the yen.
The yen's fresh decline against the dollar came on the back of rising U.S. Treasury yields as bets mounted that U.S. interest rates would remain high for longer.
U.S. Treasuries trading in Asia was halted on Monday due to the Memorial Day holiday in the United States.
UK markets were also closed on Monday due to a holiday.
The EURUSD rose 0.02% to $1.0735, while sterling fell 0.01% to $1.23495.
Financial markets now expect the Fed to raise interest rates by 62 basis points in June.
Optimism dominated sentiment in Asia as a result of news that US President Joe Biden and House Speaker Kevin McCarthy agreed to suspend the $31.4 trillion debt ceiling until January 2025, <>.
The wave of optimism lifted risk-sensitive Australian and New Zealand dollars away from their six-month lows hit last week.
The Australian dollar rose 0.41% to $0.6545 while the New Zealand dollar rose 0.29% to $0.60645.
On the other hand, the pressure on the Turkish lira continued to remain at 20.04 liras to the dollar, after falling to a record low of 20.06 liras to the dollar on Friday.
Gold is falling
Gold prices fell on Monday, after reaching a preliminary agreement on the suspension of the US debt ceiling, as fears of continued interest rate hikes for a longer period undermined the appetite for the precious metal that does not generate interest.
By 07:40 GMT, spot gold was down 0.02% at $1945,4.<> an ounce to hover near a two-month low on Friday.
U.S. gold futures were little changed at $1943,30.<> an ounce.
The appetite for safe-haven gold was affected after Joe Biden said on Sunday that he had finalized the agreement to suspend the $31.4 trillion debt ceiling until January 2025, <>, adding that the agreement was ready to be presented to Congress for a vote.
In addition, data on Friday revealed that consumer spending in the United States increased more than expected in April, and that inflation accelerated. The report boosted the chances of raising U.S. interest rates.
Oil prices rose in early Asian trade on Monday after a preliminary agreement on the government debt ceiling, which could prevent catastrophic defaults in the world's largest economy and largest oil consumer.
By 07:40 GMT, Brent crude futures were up 0.53% at $77.4 a barrel, and West Texas Intermediate crude futures were up 45 cents, or 0.7%, at $73.15 a barrel.
But markets may only breathe a sigh of relief briefly, because once the deal is approved, the U.S. Treasury is expected to issue bonds that will further reduce liquidity and increase the cost of financing for companies already struggling with rising interest rates.
Some investors are cautious, with signs that the OPEC Plus (OPEC+) group may consider implementing additional production cuts at its June 4 meeting.
Investors await manufacturing and services data in China this week and U.S. nonfarm payrolls data on Friday, looking for signs of economic growth and oil demand.