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The dollar index (DXY) fell by 0.03% on Wednesday, driven by concerns over a weakening US labor market, evidenced by the unexpected decline of 33,000 in the June ADP employment change—the first drop in over two years. This decrease came against a backdrop of a record high for the S&P 500, which decreased demand for the dollar. Additionally, the Congressional Budget Office estimates that a Republican reconciliation bill could add approximately $3.3 trillion to US budget deficits over the next decade.
The June ADP employment decline was significantly worse than the anticipated increase of 98,000. Concurrently, the Eurozone’s unemployment rate rose by 0.1 percentage points to 6.3%, contrary to expectations of no change. This decline combined with rising trade tensions, particularly after President Trump’s remarks on an unlikely trade deal with Japan, led to further fluctuations in currency values.
In the commodity markets, gold prices rose by 0.30% and silver by 0.91%, supported by the labor market’s weakness and increasing safe-haven demand amid escalated trade tensions with Japan. Despite the gains, easing Middle Eastern tensions and rising global bond yields presented bearish factors for precious metals.
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