The US dollar edged lower against major currencies on Friday after President Donald Trump succeeded in pushing through his sweeping tax legislation, amid mounting pressure on countries to quickly strike trade agreements with Washington.

The greenback had posted gains on Thursday following stronger-than-expected jobs data, which delayed expectations for Federal Reserve rate cuts. However, the dollar index, which tracks the currency’s performance against a basket of major peers, remains on track to record its second consecutive weekly decline.

The Republican-controlled House narrowly passed Trump’s signature bill, dubbed the “One Big Beautiful Law,” which combines sweeping tax cuts and expansive spending. The bill carries an estimated cost of \$3.4 trillion, pushing the U.S. national debt to \$36.2 trillion. Trump is expected to sign the bill into law on Friday.

With U.S. markets closed in observance of Independence Day, attention now turns to the looming July 9 deadline, when Trump’s wide-ranging tariffs are set to kick in for countries that haven’t secured trade agreements — including Japan.

Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, commented: “Demand for the dollar is easing amid growing concerns over ballooning U.S. debt, and whether there’s enough appetite to absorb it. There’s also worry that the tariff framework and trade disruptions will weigh on growth, while the Fed’s ability to support the economy remains limited by persistent inflation risks.”

The dollar’s performance in the first half of the year has been its weakest since 1973, as Trump’s chaotic tariff strategy rattled markets and raised questions about U.S. economic stability and the safety of Treasury bonds. Earlier this week, the greenback fell to its lowest levels in over three years against both the euro and the British pound.

The dollar index dipped 0.1% to 96.96, trimming Thursday’s 0.4% advance. The euro rose 0.1% to \$1.1773, heading for a 0.4% weekly gain.

The Japanese yen climbed 0.4% to 144.375 per dollar, while the Swiss franc extended gains, rising 0.2% to 0.7939 per dollar.

Trump said several countries would receive letters on Friday detailing the tariff rates they will face — a shift from his earlier preference for individual bilateral deals.

European Commission President Ursula von der Leyen stated that the EU aims to reach a preliminary agreement with the U.S. before the deadline. Japan, which has been in Trump’s crosshairs recently, plans to dispatch its chief trade negotiator to Washington as early as this weekend.

Adding to global trade tensions, China announced it will impose tariffs of up to 34.9% on European brandy for five years starting July 5.

Investors worried about the state of the U.S. economy found some relief on Thursday, after Labor Department data showed nonfarm payrolls rose by 147,000 in June — beating forecasts of just 110,000.

Hirofumi Suzuki, chief currency strategist at SMBC, noted: “The U.S. labor market is slowing gradually, but the fact that there wasn’t an abrupt deterioration is reassuring.”

“Personally, I expect trade talks to yield little progress, which should keep the dollar weak and support the yen.”

According to CME Group’s FedWatch tool, the probability of the Fed holding interest rates steady at its July meeting rose to 95.3%, up from 76.2% on July 2.

Economists continue to expect that the Fed is unlikely to begin cutting rates before September — or possibly even later in the year.

Gold prices rose in European trading on Friday, resuming gains that had briefly paused the previous day, and heading toward a weekly advance. The metal found support from safe-haven demand amid mounting concerns over U.S. fiscal stability linked to former President Donald Trump’s tax and spending legislation.

The U.S. dollar’s recent rebound also lost steam in forex markets, with traders awaiting further clarity on whether the Federal Reserve could cut interest rates before September.

The Price

Gold rose 0.55% to \$3,345.14 per ounce, after opening at \$3,326.30 and touching a session low of \$3,323.72.

On Thursday, the metal had fallen 0.95%, marking its first loss in three sessions following strong U.S. labor market data.

Trump’s Tax Bill

Trump’s proposed tax-cut legislation cleared its final hurdle in Congress on Thursday. The bill would fund his immigration agenda, make the 2017 tax cuts permanent, and introduce new tax breaks pledged during his 2024 campaign.

The nonpartisan Congressional Budget Office estimates the bill would add \$3.4 trillion to the U.S. national debt — which currently stands at \$36.2 trillion — over the next decade.

U.S. Dollar

The U.S. Dollar Index fell 0.25% on Friday, resuming losses after two sessions of recovery from a three-year low of 96.38. The decline reflects renewed weakness in the greenback against a basket of major and minor currencies.

As commonly observed, a weaker dollar boosts the appeal of dollar-denominated gold for holders of other currencies.

U.S. Interest Rates

Labor market data released Thursday showed the U.S. economy added 147,000 jobs in June, beating expectations of 111,000. The unemployment rate fell to 4.1% from 4.2%, while forecasts had pointed to a rise to 4.3%.

Following the report, CME Group’s FedWatch tool showed odds of a 25-basis-point rate cut at the July meeting dropping from 25% to just 5%, while the chance of rates staying unchanged rose from 75% to 95%.

Market pricing for a 25-basis-point cut in September also dropped, from 95% to 70%, with the probability of no change in rates increasing from 5% to 30%.

Fed Chair Jerome Powell noted that tariffs have altered the central bank’s rate trajectory.

Outlook for Gold

Edward Meir, analyst at Marex, commented: “Trump’s bill does nothing to restore U.S. fiscal order. Over the long run, that’s bearish for the dollar and bullish for gold.”

Meir added: “If Trump holds firm on July 9 as a deadline and reimposes tariffs, the dollar will almost certainly weaken, potentially pushing gold higher.”

SPDR Holdings

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — were unchanged on Thursday, holding steady at 947.66 metric tons, the lowest level since June 18.

The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, beginning to recover after two days of losses against the U.S. dollar. The rebound followed the release of strong household spending data in Japan, renewing hopes for solid growth in the world’s third-largest economy.

Household spending surged in May at the fastest pace in nearly three years, boosting optimism for a rebound in domestic consumption, even as U.S. tariffs continue to weigh on sentiment and economic momentum.

The Price

The dollar fell 0.25% against the yen to ¥144.57, down from the day’s opening level of ¥144.91. The session high was ¥144.97.

On Thursday, the yen had lost 0.9% against the dollar, marking its second consecutive daily decline and touching a one-week low of ¥145.23 following stronger-than-expected U.S. employment data.

Jump in Japanese Household Spending

Data released Friday in Tokyo showed household spending in Japan rose by 4.7% year-over-year in May — the fastest increase since August 2022 — well above market expectations of a 1.3% rise. In April, spending had declined 0.1%.

A Ministry of Internal Affairs official attributed the better-than-expected figures to increased outlays on one-off items such as auto-related products and dining out.

The official added that the three-month moving average of household spending has been positive since last December, signaling a recovery in consumption.

Spending and wage trends remain key indicators the Bank of Japan monitors to assess the strength of the economy and to determine the timing of future interest rate hikes.

Strong wage growth is seen as essential to offset surging living costs fueled by inflation.

Japanese companies have agreed to raise wages by 5.25% this year, the biggest annual pay hike in 34 years, according to labor union confederation Rengo on Thursday.

Yutaro Suzuki, an economist at Daiwa Securities, noted that with the yen appreciating and crude oil prices trending lower, real wages are expected to turn positive year-over-year in the second half of 2025 as inflation slows — paving the way for a gradual recovery in consumer spending.

Rate Hike Expectations

Following the data, market pricing for a potential 25-basis-point rate hike by the Bank of Japan at its July meeting rose from 40% to 45%.

Investors now await further data on inflation, unemployment, and wage growth to reassess the likelihood of a rate move.

U.S. stock indices rose on Thursday in a shortened trading session ahead of a holiday break, with both the Nasdaq and S&P 500 closing at new record highs and posting weekly gains.

Data released earlier in the day by the Bureau of Labor Statistics showed the U.S. economy added 147,000 jobs in June, surpassing Dow Jones estimates of 110,000. May’s figure was also revised up to 144,000.

Another government report showed initial jobless claims fell by 4,000 to 233,000 in the week ending June 28 — the lowest since May 17 — defying expectations of a rise to 240,000.

Following the strong employment data, the yield on the 2-year U.S. Treasury — the most sensitive to policy changes — climbed 8.3 basis points to 3.872% by 4:27 p.m. Mecca time. The 10-year yield rose 4.3 basis points to 4.336% after hitting 4.364%, while the 30-year yield added 2.6 basis points to 4.849%.

Meanwhile, data from the Institute for Supply Management (ISM) showed the U.S. services PMI rose to 50.8 in June from 49.9 in May, in line with expectations.

Wall Street will close early today, with U.S. markets shut on Friday for the Independence Day holiday.

At the close, the Dow Jones Industrial Average rose 0.8% (344 points) to 44,828, gaining 2.3% for the week. The index hit an intraday high of 44,886 and a low of 44,550.

The broader S&P 500 rose 0.8% (52 points) to 6,279, up 1.7% for the week, recording a session high of 6,284 and a low of 6,246.

The Nasdaq Composite gained 1% (208 points) to 20,601, with a weekly increase of 1.6%, reaching a high of 20,624 and a low of 20,480.