Today's Edition
TOKYO (Reuters)
The dollar struggled on Tuesday to regain its footing as investor concerns over a sweeping tax and spending bill and its implications for the US debt profile added to the recent erosion of confidence in American assets.
The euro gained on Monday while the United States was on holiday, after US President Donald Trump delayed the imposition of tariffs on Europe. The yen was underpinned by comments from the Bank of Japan governor that kept alive chances for interest rate hikes later this year.
Attention now turns to debate in the US Senate on Trump's tax-cut bill that is expected to add to the debt pile in the world's largest economy.
Markets have been sensitive to Trump's proposal, particularly after Moody's downgrade of the US sovereign credit rating on May 16.
The US House of Representatives last week passed a version of Trump's tax-cut bill that is calculated to add about $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade, according to the Congressional Budget Office.
Trump said on Sunday that the bill is likely to see "significant" changes as it is debated in the Senate.
Investor confidence in US assets has been undermined in recent months in the wake of the US president's erratic global tariff policies.
In the latest example, Trump backed down from threatened 50% duties on European Union shipments from June 1, sending the euro rallying to a one-month high.
The single currency could become a viable alternative to the dollar if governments can strengthen the bloc's financial and security architecture, European Central Bank President Christine Lagarde said on Monday.
Bond yields, particularly on the long end, have surged around the world as concerns mounted over growing fiscal deficits in advanced economies, led by the US and Japan. Japanese Finance Minister Katsunobu Kato said on Tuesday the government is closely watching the debt market.
The greenback dropped 0.3% to 142.39 yen. The dollar index, which tracks the greenback against other major trading partners, slid 0.1%, down for a third-straight session.
The European single currency was up 0.1% to $1.1397, trading near the highest since April 29. Sterling was little changed at $1.3571.
The kiwi dollar was edged 0.1% lower to $0.5994 after touching a six-month high of $0.6031 on Monday.
