The Bloomberg Dollar Index rose by 0.2%, ending a three-day losing streak, as most G-10 currencies weakened against the dollar, with the New Zealand dollar performing the worst. The New Zealand government lowered its economic growth forecast, contributing to this decline.
U.S. business activity and output expectations improved due to easing trade concerns, but tariff-related price pressures continue to rise. Gabriela Santos, Chief Market Strategist for the Americas at J.P. Morgan Asset Management, noted that while the dollar's decline has paused, it marks the beginning of a long-term downtrend. U.S. fiscal issues are now a focal point and could further catalyze the dollar's decline.
The U.S. tax reform bill narrowly passed in the House, and President Trump urged the Senate for swift approval. Federal Reserve Governor Waller suggested a rate cut path for the latter half of the year, citing tax cuts triggering a sell-off in U.S. bonds.
USD/JPY increased by 0.2% to 143.97. The U.S. Treasury stated that Treasury Secretary Bensent and Japanese Finance Minister Shunichi Kato did not discuss exchange rates during their meeting in Canada.
EUR/USD fell by 0.4% to 1.1283, with the Eurozone's private sector activity shrinking unexpectedly in May, and the services sector hitting a 16-month low. GBP/USD remained stable at 1.3427 as the UK's private sector activity continued to shrink under U.S. tariff impacts. NZD/USD dropped by 0.7% to 0.5900 following New Zealand's reduced economic growth forecast.
