As investors eye the U.S. market with unease, an economist says that could change, with major impacts in the U.S. and abroad. Over the past six months, the dollar has declined more than 10% compared with a basket of currencies from the U.S.’ major trading partners — something it has not done since 1973. European natural gas prices edged higher as traders eyed US President Donald Trump’s fast-approaching tariff deadline and the impact levies will have on global economic activity. The move is part of Trump’s rush to overhaul US trade policies that have served as a steady source of uncertainty for markets, which has helped bolster demand for gold, a safe-haven asset. The two Asian nations now have a narrow three-week window to open their markets to American products and manufacture more in the US to avoid his unilateral levies.
Stocks sour, US dollar, gold vs. bitcoin: Market Takeaways
- The Bloomberg Dollar Spot Index hit its highest level since June 26 and most global currencies slumped, with Japan’s yen and South Korea’s won sinking more than 1%.
- As I’ve long argued, it doesn’t matter what any one of has to say about markets.
- For example, a price above its moving average is generally considered an upward trend or a buy.
- The Federal Reserve can’t assume its benchmark lending rate won’t return to zero at some point in the future, according to a group of New York Fed researchers including the bank’s president, John Williams.
- The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies.
The fear, Erten explains, is that a weaker U.S. dollar is just one segment in a chain of causes and effects that could lead to economic chaos. Traveling through parts of Southern Europe used to be a way to get more bang for your buck because of the strong value of the dollar, but things have changed over the last few months. The value of the dollar has plunged about 9% since January, with a 4.5% drop in April alone. In that respect the fall of the U.S. dollar may work to the advantage of Trump, who has vowed to bring back manufacturing jobs to the U.S. A survey of global fund managers by Bank of America in June showed the lowest exposure to the US dollar since 2005.
The dollar has slumped this year as investors have questioned both the U.S. economy’s outlook and America’s role within the global financial system. President Donald Trump’s unpredictable tariff policies and apparent desire to abdicate U.S. leadership of the post-war global economic order has sparked what Wall Street has dubbed the “Sell America” trade. But assuming U.S. growth does weaken, the Federal Reserve will likely start cutting interest rates, further making U.S. financial assets less attractive to outside investors. That will cause the value of the dollar to decline even further, making it even more expensive to buy goods from abroad. On the other hand, a handful of analysts say fears of continued U.S. dollar weakness are overblown, and that U.S. economic exceptionalism will ultimately prevail.
“Trump can absolutely make the dollar go down by saying, ‘I’m going to tax investors if they come into the United States,’ which is in the Senate Bill. Americans’ wallets could be set to take a hit as the U.S. dollar has tumbled to a three-year low amid concerns about the stability and strength of the country’s economy. The Trump administration’s flip-flopping on tariffs has been “detrimental to confidence” in the US dollar, according to Sai. The country that accounts for about a quarter of the world’s mined copper shipped $4.7 billion worth of the metal last month, the biggest haul since December of 2021, according to data released by the Chilean central bank on Monday. The Federal Reserve can’t assume its benchmark lending rate won’t return to zero at some point in the future, according to a group of New York Fed researchers including the bank’s president, John Williams. Shares of telecommunications company SK Telecom — which is part of SK Group, one of South Korea’s largest conglomerates — fell more than 7%.
But Erten emphasizes that Americans will feel the impact of a weakened dollar on their wallets eventually. The U.S. dollar slumped to its lowest level since 2022 on Thursday, putting the greenback on track to have its worst start to a year in decades. One obvious effect of a weakening U.S. dollar is that it becomes more expensive for Americans to go to popular destinations abroad, since the greenback will be worth less than local currencies. Of course, such excursions tend to be taken largely by travelers who are less worried about increased costs. President Donald Trump wants the U.S. to increase its exports and lower its imports. Thanks to a historic decline in the value of the U.S. dollar, he may get his wish — but at a cost he may not have anticipated.
FTSE 100 and US markets fall as Trump calls for Iran’s ‘unconditional surrender’
Benchmark futures added 0.5% on Monday, after posting a small weekly gain through Friday. The US is preparing to start delivering letters to dozens of countries in the coming days, with the Trump administration’s 90-day pause on higher duties set to expire on Wednesday. The authors, in a blog post published Monday, found a 9% probability the federal funds rate would hit the so-called zero lower bound, or ZLB, over a seven-year horizon, with the current high level of interest-rate uncertainty contributing to that risk. Lula said the US president was “irresponsible for threatening tariffs on social media” before calling on world leaders to find ways to reduce international trade’s reliance on the dollar, a position shared by the group of emerging market nations.
US Stock Market LIVE Updates: Toyota, Honda shares slide after Trump announces 25% tariffs on Japan and South Korea
International stocks can provide better returns in a weaker dollar environment. “We can point to our non-US equity holdings and show what that diversification benefit has looked like year to date,” he said. The dollar’s decline reflects a crisis of confidence in the United States, said Arun Sai, senior multi asset strategist at Pictet Asset Management.
CNBC Newsletters
- The US-listed shares of South Korean companies SK Telecom and LG Display slid in midday trading following President Donald Trump’s announcement of 25% on the country.
- He said he sees the decline in the dollar as less of an indictment of the United States and more of a “positive outlook” for other countries around the globe.
- European natural gas prices edged higher as traders eyed US President Donald Trump’s fast-approaching tariff deadline and the impact levies will have on global economic activity.
Even then, that data will likely only show a snapback effect from the first quarter’s upswing. And while Trump has announced a flurry of new investments designed to beef up U.S. production capacity, many of those endeavors are months or even years from coming on line. In theory, the advantage of a weaker U.S. dollar is that it makes goods produced in the U.S. more attractive to foreign markets. Blackwell said international mutual funds and ETFs are great opportunities to diversify portfolios. He said he sees the decline in the dollar as less of an indictment of the United States and more of a “positive outlook” for other countries around the globe. Meanwhile, there have been more appealing investment opportunities in Europe.
USDX is updated whenever US Dollar markets are open, which is from Sunday evening New York time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York time. The make up of the “basket” has been altered only once, when several European currencies were subsumed by the euro at the start of 1999. The make up of the “basket” is overdue for revision as China, Mexico, South Korea and Brazil are major trading partners presently which are not part of the index whereas Sweden and Switzerland are continuing as part of the index.
US Stock Market LIVE Updates: Treasury’s Cash Rebuild After Debt-Ceiling Hike Will Be Different Than 2023
The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. US Gross Domestic Product (GDP) Adventure Capitalist refers to the total market value of all final goods and services produced in the United States. It serves as a gross measure of market activity, indicating the pace at which the nation’s economy is growing or contracting. Generally, a high reading or better-than-expected number is considered positive for the Dollar Index, while a low reading is seen as negative.
US Stock Market LIVE Updates: South Korean Assets Plunge on Trump’s 25% Tariff Announcement
However, worries that Trump’s trade tariffs would complicate the BoJ’s path to rate hikes could continue to support the pair. New Highs/Lows only includes stocks traded on NYSE, NYSE Arca, Nasdaq or OTC-US exchanges with over 5 days of prices, with a last price above $0.25 and below $10,000, and with volume greater than 1000 shares. For decades, the U.S. dollar has been the de facto currency for international markets.
EUR/USD climbs to near 1.1750 as tariffs uncertainty downs the US Dollar
Stocks fell Monday as traders weighed the latest developments on the trade front to start the week. Both letters say that the 25% tariffs are separate from additional sector-specific duties on key product categories. The duty would be charged on top of any other tariffs and there would be no exceptions to the policy, Trump said in a Sunday-night post on Truth Social.
The weakness in stocks on Monday boosted some liquidity demand for the dollar. The dollar extended its gains Monday when President Trump announced plans to hike tariffs on several countries, including Japan, South Korea, Laos, South Africa, Myanmar, and Malaysia, with rates ranging from 25% to 40%, effective August 1. The higher tariffs could boost inflation and prevent the Fed from cutting interest rates, a supportive factor for the dollar. Wall Street had expected the dollar to strengthen under President Donald Trump’s second term. His policies of tax cuts were expected to spur economic growth and tariffs were expected to reduce demand for foreign imports, boosting the greenback’s value. All of the uncertainty around the dollar runs counter to a global financial market that has long seen U.S. currency as the safest bet around.