Dollar steadies after sharp losses; Trump tax bill in focus
The U.S. dollar edged higher Thursday, but fiscal concerns kept the currency under pressure as the passage of President Donald Trump’s tax bill moved closer.
At 04:30 ET (08:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 99.500, after three consecutive losing sessions.
Dollar under pressure
Trump’s tax and spending bill cleared an important procedural hurdle in the lower house on Wednesday, when a gatekeeper committee approved the measure and set up a floor vote for passage to occur within hours.
House passage would set the stage for weeks of debate in the Republican-led Senate.
The passage of the bill has weighed on the dollar, with the nonpartisan Congressional Budget Office estimating the bill will add $3.8 trillion to the $36.2 trillion in U.S. debt over the next decade.
Moody’s downgraded its U.S. credit rating from the top treble-A rating, citing the failing of successive governments to deal with the country’s growing national debt.
“Market concerns over the deficit impact of the bill have intensified this week, and triggered another coordinated selloff in US equities and bonds yesterday. The dollar is falling across the board as a consequence,” said analysts at ING, in a note.
In Europe, EUR/USD slipped 0.1% lower to 1.1319 after eurozone business activity unexpectedly slipping back into contraction this month as the bloc’s dominant services industry suffered a deeper downturn in demand.
GBP/USD rose 0.1% to 1.3426, with the composite U.K. Purchasing Managers’ Index gaining to 49.4 this month from April’s 48.5.
This followed data, released on Wednesday, showing that British inflation surged by more than expected in April.
In Asia, USD/JPY traded 0.5% lower to 143.04, falling to the lowest level since May 7.
This followed Japanese Finance Minister Katsunobu Kato saying he did not talk about foreign-exchange levels in his discussions with U.S. Treasury Secretary Scott Bessent on the sidelines of the Group of Seven meetings in Canada.
Source: Investing.com
