The declining dollar faces more headwinds after posting worst first-half return in 52 years
This picture, which was taken on 25 April 2025, shows the US Dollar banknote and decreasing stock graph.
Dado Ruvic | Reuters
The US dollar, which has just released from the worst performance of Richard Nixon since his worst performance, faces various winds that can have significant investment results until the second half of the year.
Greenback rolled 10.7% against its global peers until June, and when Nixon broke the Bretton Woods Gold standard, he has done the worst first half since 1973. Underneath, the currency has reached the lowest point since February 2022.
The next road may not look much brighter.
The reason for this is that many of the same factors – policy volatility, swelling debt and deficits and potential interest rate deductions from the Federal Reserve will probably remain in the minds of investors when they seek other ways for safe paradise.
Dollar palate
B. Riley Wealth Management’s Chief Market Strategist Art Hang said, “Some of them were probably obtained, and then we certainly gave the money traders enough to think about what the catalyst is.” He said. “You can control too many boxes. You use large deficits and no one does not want to stop it on both sides of the corridor. You alienate friends in terms of both military and trade. You have enough potential negative catalysts. And then when the momentum begins, it’s hard to stop it.”
Indeed, the shift of the dollar began in mid -January, and since then it has only shown moderate signs. President Donald Trump’s tariffs would not be as upright as it would help to lead a short rally in the middle of April, but mostly gravity withdrawal was lower.
Market effect
Of course, the slide of the dollar was not exactly poison for stocks.
For S&P 500 companies from international sales, a weaker dollar with more than 40% of income helps to make American exports cheaper, which is an important point to consider between the ongoing trade war.
However, Move Lower coincided with growing speeches about the potential end of American exceptional and dollar hegemony, and the US debt’s open share of $ 30 trillion and $ 2025 on the track of $ 2 trillion. If American assets, such as Greenback and Treasury debt, lose their importance at the global stage, it may have strong consequences for risk assets such as stocks.
Global central banks, the first, as an alternative to US assets, according to the World Gold Council, the gold purchases to 24 tons per month. Gold has run the best first half since 1979.
“That the central banks purchased gold to diversify the reserves, [dollar]and protection against inflation and economic uncertainty,
Similarly, TS Lombard continues a short position on the Greenback, which he calls “the gift that continues to give”.
“Trump’s attacks on the FED and the desire of the administration for a weaker dollar only contribute to this view,” the company wrote the senior macro strategist Daniel von Ahlen. “The dollar is overly valued in most FX metric … USD negatives are everywhere, why don’t you expect the dollar to become worthless?
The federal reserve can also apply lower pressure by entering the expected ratio deductions at the back of the year. However, when the dollar and treasury yields are last cut in 2024, the dollar and treasury yields increase sharply increased, the effect of Fed Losing can be difficult for the handicap.
A reversal hope
To be sure, the ongoing decline of the dollar is not in any way, and others in the Wall Street think that the trend can reversal.
Thomas Matthews, President of the Asia Pacific Markets in Capital Economics, said that the last rally in stocks pointed to the increasing comfort with US assets, and that the previous dollar weakness is perhaps a product of a transition in protection strategies, as well as a transition in protection strategies.
Wells Fargo also thinks that fears about dollars are exaggerated.
“It is clear that Greenback remains as a linhpini and is far from being irrelevant, by adopting a statistical approach to analyze the role of the US dollar,” Wells Fargo Investment Strategy Analyst Jennifer Timmerman said. He said: “The US dollar, which makes a very difficult and slow -moving process from the dollar, especially because of the underlying weaknesses of the most visible dollar alternatives, a global shift is extremely difficult and slow -moving process that makes the advantages of deep -seated advantages (such as the superiority of law, transparency and extremely liquid market).
Treasury Secretary Scott Bessent also told CNBC that the currency fluctuations to CNBC on Monday were not “ordinary”.
However, the increasing returns on the Treasury debt refers to concerns about the dollar and other US assets.
B. Riley strategist Hagan, “Momentum in terms of negativity is in the stage of relying.” He said. “But basically, you can definitely take a white -board to the white -board.”
