USD/TRY refreshes all-time-highs above 19.80, US Biden-McCarthy negotiations eyed

• USD/TRY has refreshed its all-time high above 19.80 as the focus has shifted to US Biden-McCarthy talks.
• House of Representative McCarthy wants a hefty 8% cut in overall spending proposed by Democrats for the budget.
• Escalating political uncertainty in Turkey is consistently weighing on the Turkish Lira.

The USD/TRY pair has printed a fresh all-time-high above 19.80 in the Asian session. The asset has witnessed buying interest as the US Dollar Index (DXY) is making efforts for defending further downside near 103.00.

The USD Index has found some support as US President Joe Biden is scheduled to meet House of Representatives Kevin McCarthy for further negotiations on the US debt-ceiling on Monday. However, investors are still worried that approval for an increase in the US borrowing cap won’t be a cakewalk.

House of Representative McCarthy wants a hefty 8% cut in overall spending proposed by Democrats for the budget. While Democrats are ready to cut spending for education and labor enforcement programs by an average of 22%. Therefore, a bipartisan deal is less likely and US President Joe Biden could consider an exercise of his 14^th Amendment right in which obligated borrowing will get paid without approval from Republicans.

S&P500 futures have squared-off entire losses posted in Asia, portraying a recovery in the risk appetite of the market participants. The overall market mood is turning bullish as the Federal Reserve (Fed) is set to pause its policy-tightening spell in June. This has trimmed fears of a recession in the United States economy, however, a failure in the US debt-ceiling raise would result in a spike in interest rates.

On the Turkish Lira front, concerns over the possibility that President Erdogan could win another mandate are soaring due to his economic policies, which the general public calls as unorthodox. Escalating political uncertainty in Turkey is consistently weighing on the Turkish Lira.