US dollar rises, British pound falls as markets weigh trade deals, Fed rate cut
The U.S. dollar rose against major currencies on Wednesday as data supported market expectations of a Federal Reserve interest rate cut, while the pound sterling fell amid a selloff in British government bonds.
Traders were also positioning ahead of the Labor Department's employment report for June, due to be released on Thursday, and the July 4 holiday.
The dollar had lost ground briefly but regained momentum after the ADP National Employment Report showed U.S. private payrolls fell for the first time in more than two years in June, suggesting the Fed might cut rates as soon as September.
President Donald Trump's massive tax-cut and spending bill passed the U.S. Senate on Tuesday by the narrowest of margins, which is expected to add $3.3 trillion to the national debt. Debate over the legislation has now returned to the House of Representatives.
Trump announced Vietnam had struck a trade deal with the U.S., which lowers planned tariffs and could push other countries to reach similar agreements on duties ahead of the July 9 deadline for higher tariffs to kick in.
The dollar was up 0.15% to 143.635 against the Japanese yen , on track to snap two straight sessions of losses. It was up 0.06% to 0.79150 against the Swiss franc , on track for gains after seven consecutive sessions of declines.
British bonds suffered their worst selloff since October 2022, the day after the government sharply scaled back plans to cut benefits and there was speculation about the future of the country's finance minister. Sterling weakened 0.79% to $1.3634 against the dollar, dropping to a one-week low and poised to snap two straight sessions of gains.
The euro fell 0.08% to $1.179725 against the dollar but gained 0.9% versus the pound sterling .
Eurozone inflation edged up last month to the European Central Bank's 2% target, confirming the era of runaway prices is over and likely shifting policymaker focus to tariff-related volatility.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.154% to 96.786, on track to snap nine straight sessions of losses. The index was still trading at multi-year lows after having its worst half-year since the 1970s, weighed by trade uncertainty.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.2 basis points to 3.789%, reversing earlier losses.
Source : Reuters
