The US dollar is falling as the US tax bill raises debt concerns
Amid growing concerns about the repercussions of the US tax and spending bill on the public debt, the dollar faced some pressure, which further exacerbated concerns about US assets.
On the other hand, the statements of Bank of Japan officials that the door to raising interest rates remained open to raising interest rates this year.
The tax bill raises concerns
The tax cut bill proposed by former US President Donald Trump has become the focus of investors attention, especially after the House of Representatives approved a version of it last week.
The bill is expected to add about 3.8 trillion dollars to the US Federal debt, which is already approaching 36.2 trillion dollars over the next decade, according to estimates by the Congressional Budget Office.
Trump pointed out that the draft may see major amendments during its discussion in the Senate, but the markets seem cautious about its possible effects, especially after Moody's decision to downgrade the US credit rating in November.
Erosion of confidence in US assets
Investor confidence in the US economy has been experiencing a noticeable decline in recent months, due to the volatile trade policies of the United States, including repeated threats to impose tariffs on trading partners.
This has led to a growing demand for alternative currencies, such as the euro, which rose in trading on Monday after Trump postponed the imposition of duties on European imports.
Comment by Christine Lagarde, European Central Bank Governor
Christine Lagarde, president of the European Central Bank, also commented that the euro could become a practical alternative to the dollar if the EU countries strengthen their financial and security structure.
Comment by Kazuo Ueda, governor of the Bank of Japan
On the other hand, the Japanese yen gained additional gains after remarks by Kazuo Ueda, governor of the Bank of Japan, who indicated continued vigilance towards inflation, keeping the option of raising interest rates possible before the end of the year.
Ueda stressed that the central bank is ready to continue tightening monetary policy if necessary, which strengthened investor confidence in the Japanese currency.
The yen rose after these statements and reached the levels of 142.15 against the US dollar, before falling again and reaching the levels of 143.40 dollars.
Pessimistic economic forecasts
Currently, market movements indicate growing fears of a slowdown in global economic growth, as bond market indicators warn of a possible worsening of the situation.
With continued political and financial uncertainty in the United States, it seems that the dollar may continue to decline, while the markets are looking for safer havens in light of the turbulent economic landscape.
