Dollar weakened on weak US labor news and escalating trade tensions with Japan.

The dollar index fell by -0.03% on Wednesday due to concerns about weakening US labor market showing in the June ADP employment change report. Rising deficits and a new S&P 500 high also contributed to the dollar’s decline. Markets are predicting a 23% chance of a -25 bp rate cut at the July FOMC meeting.

EUR/USD fell by -0.07% on Wednesday after an unexpected increase in Eurozone unemployment and dovish comments from ECB Governing Council member Rehn. The Eurozone May unemployment rate rose +0.1 to 6.3%, below expectations. Swaps are pricing in a 5% chance of a -25 bp rate cut by the ECB at the July 24 policy meeting.

USD/JPY rose by +0.14% as the yen weakened on escalated trade tensions with the US after President Trump stated a trade deal with Japan is unlikely. Higher tariffs and T-note yields weighed on the yen. President Trump indicated Japan may face tariffs of 30% or more.

Gold and silver prices closed higher on Wednesday due to the unexpected decline in US June ADP employment change, trade tensions with Japan, and dovish comments from ECB Governing Council member Rehn. Concerns about the US budget deficit also supported precious metals. Middle East tensions easing and higher global bond yields were negative factors for precious metals.

Read more at Yahoo Finance: Dollar Gives Up Early Gains on Weak US Labor News