Dollar Decline: Impact of U.S. Deficit and Trade Deals

The U.S. dollar experienced a decline against both the euro and Swiss franc on Monday, influenced by mounting worries over a surging U.S. government deficit and the potential for new trade agreements. These concerns come amid efforts by Senate Republicans to push through President Donald Trump's comprehensive tax-cut and spending bill, even as the proposal faces opposition within the party due to its anticipated $3.3 trillion increase in national debt.

The dollar fell by 0.49% to 0.795 against the Swiss franc, while the euro rose by 0.21% to $1.1746 against the dollar. This trend suggests a monthly finish of a 3.4% decline against the franc, with the euro poised for a 3.4% gain against the dollar. According to Eugene Epstein, head of structuring for North America at Moneycorp, the weak dollar is the result of a potentially large budget deficit and ongoing uncertainties related to tariff agreements.

Despite resolving some issues with China over shipments of rare earth minerals, Treasury Secretary Scott Bessent warned that higher tariffs could still be imposed on July 9, depending on President Trump's decisions. Temporary shifts in trade policy, such as recent moves involving Canada, contribute to the volatility in currency markets.

(With inputs from agencies.)