The US dollar (USD) weakened on Friday (04/07), moving lower in holiday-thinned trading and ending two consecutive days of gains. After rising on stronger-than-expected US Nonfarm Payrolls data released on Thursday, the greenback is now paring gains, as market activity remains subdued amid the July 4 Independence Day holiday in the United States.

The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, traded flat during American trading hours. At the time of writing, the index was hovering near 97.00, retreating from a weekly high of 97.42 reached on Thursday after stronger-than-expected US jobs data.

The decline came as traders weighed the strong US jobs figures against broader risks, including US President Donald Trump's protectionist tariffs and growing fiscal concerns following the passage of his massive tax and spending bill.

The legislation, approved by the House of Representatives on Thursday, is projected to significantly widen the budget deficit, fueling investor concerns about the long-term stability of the US public finances. While upbeat labor market data initially lifted the US dollar, concerns about protectionist trade measures and rising debt levels are now weighing on sentiment.

US President Trump has been escalating tariff tensions ahead of the July 9 deadline. He announced on Thursday that he would begin sending letters to his trading partners this Friday. His intention, he said, was to send "10 or 12" letters to major trading partners, with more to follow in the coming days, each outlining unilateral tariffs that will go into effect on August 1. Trump also added, referring to that, "it will range from maybe 60 or 70 percent tariffs to 10 and 20 percent tariffs," underscoring his more aggressive protectionist stance just days ahead of the July 9 deadline. (alg)

Source: FXstreet