US Dollar Slides Toward 99.50 as Trump’s Tax Bill Raises Debt Worries
The US Dollar Index (DXY) fell to around 99.50 on Thursday, marking its lowest point in two weeks. This drop came after the House of Representatives passed the first stage of former President Donald Trump’s proposed tax plan, known as the “One Big Beautiful Act.”
The bill includes tax breaks on tips and loans for U.S.-made cars, but it’s expected to increase the national deficit by $3.8 billion. This has sparked fresh concerns over the government’s already high debt, pressuring the dollar.
Bond markets also reacted. The 30-year U.S. Treasury yield dropped to 5.05% after touching 5.15%, its highest since November. This shows investors are growing uneasy about the country’s long-term financial position.
Still, the dollar didn’t collapse. It found some support from better-than-expected economic data. The S&P Global Composite PMI rose to 52.1 in May from 50.6 in April, showing a pickup in business activity. Manufacturing and services sectors also showed solid growth.
Fed Governor Christopher Waller added that if trade tariffs remain stable, the economy could stay strong in the second half of 2025, opening the door for possible rate cuts.
Impact: The dollar could stay under pressure if debt worries continue. But strong economic numbers might help limit the downside in the short term.