The dollar rose after strong US jobs data
The US dollar witnessed a noticeable rise on Friday, supported by a stronger-than-expected jobs report, as the data showed the addition of 147 thousand new jobs in June, while the unemployment rate fell to 4.1%, contrary to analysts expectations of an increase to 4.3%.
These positive indicators strengthened investors ' confidence in the strength of the US economy, prompting the ten-year US Treasury bonds to rise by 7 basis points, and reduced expectations of interest rate cuts at the next meeting of the Federal Reserve from 23% to 5%.
The impact of trade deficits and fiscal stimulus
Despite the positive picture, some factors limited the dollar's gains, most notably the negative trade deficit report, as well as the passage of the tax reconciliation bill signed by US President Donald Trump after congressional approval.
This law is expected to add about 3.3 trillion dollars to the fiscal deficit over the next decade, raising fears of a worsening of the US debt crisis despite its positive stimulating effects on short-term economic growth.
Raising the debt ceiling and its impact on markets
The law also included an increase in the federal debt ceiling by 5 trillion dollars, ensuring the avoidance of any default until 2027.
This decision removes uncertainty in the markets for a while to come, but leaves questions about the long-term sustainability of US fiscal policies.
