HG MARKETS:

The U.S. dollar saw some of its recent gains pared back on Friday. This happened after President Donald Trump’s tax cut bill officially passed and as pressure intensified for other countries to finalize trade deals with the U.S. While the dollar had rallied on Thursday due to stronger-than-expected U.S. jobs data, which reduced expectations for immediate Federal Reserve rate cuts, the dollar index is still set for its second straight week of declines.

The Republican-controlled House of Representatives approved Trump’s substantial spending and tax cut bill, estimated to add $3.4 trillion to the national debt. With the U.S. observing Independence Day, attention shifts to Trump’s July 9 deadline, when significant tariffs are set to hit countries like Japan that haven’t secured new trade agreements. The dollar index experienced its weakest first half of a year since 1973, largely due to concerns sparked by Trump’s tariffs about the U.S. economy and the safety of Treasury investments. Earlier in the week, the dollar even fell to its lowest point in over three years against both the euro and the British pound.

On Friday, the dollar index slightly dipped by 0.1% to 96.93, lessening its 0.4% gain from Thursday. The euro gained 0.2% to $1.1775, putting it on track for a 0.5% weekly increase, while the Japanese yen strengthened by 0.4% to 144.40 against the dollar. Trump indicated that countries would receive letters on Friday detailing their specific tariff rates, a change from his earlier approach of negotiating individual deals. European Commission President Ursula von der Leyen stated that the EU aims for an “agreement in principle” with the U.S. on trade before the deadline. Japan, a recent target of Trump’s criticism, is reportedly sending its chief trade negotiator back to the U.S. as early as this weekend.

In economic news, the U.S. Labor Department’s report on Thursday showed that nonfarm payrolls increased by 147,000 jobs in June, significantly surpassing economists’ forecasts of 110,000. Following this strong jobs data; market expectations for the Fed to keep interest rates unchanged at its July meeting have jumped to a 94.8% probability, up from 76.2% just a few days prior. The British sterling also saw a slight rise of 0.1% to $1.3668.