NEW YORK: The US dollar gained ground against major currencies including the euro and the Swiss franc on Tuesday after data showed a better-than-expected increase in labor market demand, indicating the Federal Reserve will likely take its time to cut interest rates.
The Republican-controlled US Senate passed President Donald Trump’s tax and spending bill, approving a massive package that would enshrine many of his top priorities into law and will add $3.3 trillion to the national debt. The bill will move to the House for final approval.
Federal Reserve Chair Jerome Powell had reiterated that the central bank plans to wait for more data before it starts monetary policy easing, but he did not rule out a July cut. Powell spoke at a central banking conference in Portugal.
The dollar pared losses against the Japanese yen and gained against the Swiss franc after Labor Department data showed job openings rose 374,000 to 7.769 million in May. It pared losses further against the yen and extended gains against the franc after the US Senate cleared the spending bill.
The dollar weakened 0.22% to 143.67 against the yen and was up 0.06% to 0.7925 versus the Swiss franc, compared with a drop of 0.46% and 0.28% respectively before the data. The euro was last down 0.20% at $1.176525 after being up 0.05% earlier in the day.
“It was the worst first half of the year for the US dollar index since 1973 with a lot of that weakness being driven by concerns about trade policy and concerns about a slowing economy,” said Matthew Weller, global head of market research at StoneX. “But I think on a very short-term basis we might be seeing the market get a little bit stretched here and I think there might be a case for a US dollar bounce as we move through July.”
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.161% at 96.908 after being down 0.05% to 96.71. It is on track to snap eight straight sessions of losses.
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