The dollar index (DXY00) today is up by +0.30%. The dollar is climbing today due to increased trade tensions with Japan, as the yen has retreated after President Trump stated that a trade deal with Japan is unlikely. The dollar added to its gains when GBP/USD tumbled to a 1-week low on political turmoil in the UK after UK Prime Minister Starmer failed to fully back Chancellor of the Exchequer Reeves, bolstering speculation that Reeves may soon step down.
The dollar is being undercut by concern that the US labor market is weakening after the June ADP employment change declined for the first time in more than two years. Also, rising deficits are bearish for the dollar as the Congressional Budget Office estimates the Republicans’ reconciliation bill making its way through Congress would add nearly $3.3 trillion to US budget deficits over the next ten years.
