An infernal spiral? After registering its worst performance from the presidency of Richard Nixon, the US dollar faces several obstacles to the second semester approach, which could have important investment repercussions.
Greenback has fallen by 10.7% compared to other international currencies, which represents its worst first half since 1973, the year Nixon broke Bretton Woods. The currency has reached its lowest level since February 2022.
And the future does not seem more promising. In fact, a series of factors, such as the volatility of Trump administration policies, debt swelling and deficits, and the possible decrease in the interest rates of the Federal Reserve can continue to weigh the minds of investors that will seek other shelters.
Increase in gold purchases
In fact, the drop in the dollar began in mid -January and has not shown signs of recovery since then. The hope that the customs tasks of President Donald Trump are not as high as he thought he contributed to trigger a brief rise in mid -April, but in general, the trend is low.
Of course, the drop in the dollar was not bad news for the shares. With more than 40% of the billing of S&P 500 companies of international sales, the weakness of the dollar helps to make US exports cheaper, an important point to take into account in the context of the current commercial war.
However, this fall coincided with the growing rumors about the possible hegemony of the end of the dollar, the public participation of the US debt that was close to $ 30,000 billion and the deficit in 2025 is in the process of reaching almost $ 2,000 billion. If US assets, such as backback and treasure invoices, lost their importance in the world scene, this could have strong repercussions in risk assets as actions, explain to our colleagues.
The world’s central banks, for example, increase their gold purchases, 24 tons per month, according to the Gold Council World Cup, as an alternative to US assets. In addition, Gold has registered his best performance in the first half since 1979.
“It is a trend that, in our opinion, should continue, especially in a context of uncertainty about the duties and concerns of US customs about the budget deficit,” he continues.
Similarly, TS Lombard (a macroeconomic prognosis consulting company) maintains a sales position in the backback. “Trump’s attacks against the Fed and the explicit will of the administration of a lower dollar only strengthen this point of view,” said Daniel von Ahlen, a senior macroeconomic strategist of society.
The Federal Reserve could also exert a greater drop pressure in implementing reductions in reduced fees at the end of the year. However, the impact of feeding flexibility can be difficult to evaluate, since the dollar and yields of treasure invoices increased dramatically during the last drop in the central bank rate in 2024.
I await an investment
It is true that the continuous decrease in the dollar is not guaranteed in any way, and other Wall Street players think that the downward trend could be reversed.
Thomas Matthews, responsible for Asia-Pacific markets in Capital Economics, said the recent rebound in the shares shows a rebirth of confidence in US assets, the previous weakness of the dollar is only the result of the expected evaluation of other currencies and a change in the coverage strategy.
Wells Fargo also believes that fears related to the dollar are exaggerated.
“We believe that the US dollar has fundamental advantages that make a global abandonment of the dollar extremely difficult and slow, especially due to the underlying weaknesses of the alternatives to the most visible dollar,” he continues.
The secretary of the Treasury, Scott Besent, also made his contribution, declaring CNBC on Monday that monetary fluctuations “were not unusual.”
However, the increase in treasure debt yields also attests to concern awakens for the dollar and other US assets. “We are in a stage where the dynamics is excessively,” said Hogan, B. Riley strategist. “But fundamentally, we could certainly identify many elements that could worry.”
Source: BFM TV
