Latest news with #KingDollar
Yahoo
01-07-2025
- Business
- Yahoo
The dollar posted its worst first-half performance since Nixon was president
The US Dollar Index fell 10.8% in the first half of 2025 — its worst performance since 1973. The decline is driven in part by the "Sell America" trade amid economic and political concerns. A weaker dollar boosts US exports but raises import costs and affects summer travel expenses. The dollar keeps getting deeper into the bear market as the summer travel season is in full swing. On Monday, the US Dollar Index ended the first half of the year 10.8% lower. That's its worst first-half performance since 1973, when Richard Nixon was president. At the time, the index fell 14.8%. On Tuesday, the US Dollar Index was 0.1% lower at 96.75 at 12:57 a.m. ET . The index measures the greenback against a basket of six major currencies. The sharp decline is a surprising turn for a currency typically seen as a safe haven in uncertain times. Analysts have attributed King Dollar's slump to the "Sell America" trade, as investors dumped US assets, including stocks and Treasurys, in response to President Donald Trump's trade war. Slower economic growth, political uncertainty, and rising fiscal concerns have contributed to the dollar's slide. Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan, wrote on Tuesday that the greenback is under pressure from President Donald Trump's "big beautiful bill." The bill, which is pending a vote in the Senate, is stoking concerns about an additional $3.3 trillion to the US's deficits over a decade, according to a new estimate from the nonpartisan Congressional Budget Office. "An unsustainable debt path is a key motivator of the 'Sell America' narrative that has compromised USD and USD assets," wrote Varathan. Meanwhile, pull factors in other parts of the world are enticing investors, according to Sami Pepin, a fixed-income strategist at Lombard Odier, a Swiss private bank. They include defense and government spending plans in the euro zone and better stock performances elsewhere. "Combined with broad-based concerns about global investors' high exposure to US assets, the result is strong negative USD sentiment, with limited respite," he wrote. Despite the dollar's weakness, US stock markets have recently hit record highs. Treasurys have also made some recovery since their selloff in recent months. The conflict is not irreconcilable, as investors appear to be hedging, not selling, the US market, according to Varathan. "A naked 'Sell America' position can be a costly endeavour," he wrote. "Hedging for US risks via a bearish USD while being invested in US equities and USTs may be the compelling play for a while yet," he added. A weaker currency isn't all negative for the US. It's good for exports, which translates into profits and sales for US companies overseas. However, it means imports could get more expensive — and even stoke inflation. More immediately, summer vacations abroad could get more expensive for travelers. The dollar's decline means that it has been losing ground against major currencies, including the euro and the British pound. On Monday, the dollar hit a four-year low against the euro. Asian currencies have also made broad gains against the dollar, with the Japanese yen 9.3% higher this year. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
01-07-2025
- Business
- Business Insider
The dollar posted its worst first-half performance since Nixon was president
The dollar keeps getting deeper into the bear market as the summer travel season is in full swing. On Monday, the US Dollar Index ended the first half of the year 10.8% lower. That's its worst first-half performance since 1973, when Richard Nixon was president. At the time, the index fell 14.8%. On Tuesday, the US Dollar Index was 0.1% lower at 96.75 at 12:57 a.m. ET . The index measures the greenback against a basket of six major currencies. The sharp decline is a surprising turn for a currency typically seen as a safe haven in uncertain times. Analysts have attributed King Dollar's slump to the "Sell America" trade, as investors dumped US assets, including stocks and Treasurys, in response to President Donald Trump's trade war. Slower economic growth, political uncertainty, and rising fiscal concerns have contributed to the dollar's slide. Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan, wrote on Tuesday that the greenback is under pressure from President Donald Trump's "big beautiful bill." The bill, which is pending a vote in the Senate, is stoking concerns about an additional $3.3 trillion to the US's deficits over a decade, according to a new estimate from the nonpartisan Congressional Budget Office. "An unsustainable debt path is a key motivator of the 'Sell America' narrative that has compromised USD and USD assets," wrote Varathan. Investors could be hedging, not selling America Meanwhile, pull factors in other parts of the world are enticing investors, according to Sami Pepin, a fixed-income strategist at Lombard Odier, a Swiss private bank. They include defense and government spending plans in the euro zone and better stock performances elsewhere. "Combined with broad-based concerns about global investors' high exposure to US assets, the result is strong negative USD sentiment, with limited respite," he wrote. Despite the dollar's weakness, US stock markets have recently hit record highs. Treasurys have also made some recovery since their selloff in recent months. The conflict is not irreconcilable, as investors appear to be hedging, not selling, the US market, according to Varathan. "A naked 'Sell America' position can be a costly endeavour," he wrote. "Hedging for US risks via a bearish USD while being invested in US equities and USTs may be the compelling play for a while yet," he added. A weak dollar is bad for imports and summer vacations abroad A weaker currency isn't all negative for the US. It's good for exports, which translates into profits and sales for US companies overseas. However, it means imports could get more expensive — and even stoke inflation. More immediately, summer vacations abroad could get more expensive for travelers. The dollar's decline means that it has been losing ground against major currencies, including the euro and the British pound. On Monday, the dollar hit a four-year low against the euro.
Arabian Post
18-05-2025
- Business
- Arabian Post
Moody's credit downgrade is a macro game changer. What now?
Matein Khalid While I was not surprised by Moody's decision to cut the sovereign credit rating of the US from Aaa to Aa1 since I have done my best to warn my friends in this post about the King Dollar's vulnerable underbelly on debt/deficits, I am surprised that the credit rating agencies is willing to risk the wrath of Trump White House with this move. After all, Trump could well invoke the International Emergency Economic Powers Act to handcuff Moody's entire executive board for an enforced sojourn in Club Fed or even declare or shut down the credit rating agencies for this un-American act of lèse-majesté. However, nothing good will come out of this move for risk assets or the US dollar. US Treasury bond yield will rise, the S&P 500 will tank on Monday and the Republicans now a neo-Maoist personality cult for Tariff Man rather than a pragmatic, rational political party will go ballistic in their political outrage. The timing of this move is Godawful. The S&P 500 Index is up a stellar 20% since Trump did a U-turn on China tariff and the need to sack 'Mr. Loco/loser' Jay Powell from the Federal Reserve. It will also amplify the existing decline in both consumer and business confidence as well as increase credit/liquidity risk premia in the stressed FHA mortgage debt, auto loan, credit receivables, student debt, junk bond and asset backed securities market in an economy that must refinance $9.5 trillion by this winter. The Moody's move will also reinforce the embryonic megatrend towards a strategic asset allocation shift by global investors out of greenback assets, the dominant theme in post-Liberation Day financial markets for moi. See also My bearish King Dollar and black gold trades are money gushers! I did not need Moody's to enlighten me that something was dangerously wrong in a $28 trillion economy with $35 trillion in debt and almost $2 trillion in annual budget deficits that Uncle Sam, the world's monetary emperor, literally wore no clothes. The global sovereign debt market is full of miss priced credit and the US is only the tip of a very dodgy intercontinental iceberg where serious money can be made by the leveraged cognoscenti at the expense of the trusting, patriotic, my country right or wrong loony-tune lambs. Nicolo Machiavelli wrote – 'do not put your trust in the false promises of princes' after a lifetime navigating the murderous politics of Renaissance Florence. As a citizen of a Third World state under military diktat that just received a $1 billion IMF thank you gift from Trump last week for being part of a brilliant people, especially since I got 4-degrees from the same Penn/Wharton, I can only say thank you POTUS, we love ya! Moody's will increase the pressure on money managers to take profits in US equities and corporate bonds. Since Moody's has cast the first stone into the US Treasury bond market, the benchmark for risk in debt, the shockwaves of the credit downgrade will spare not even the most obscure outpost of the global financial village. The only consolation is that unlike the case in August 2001, even Dr. Louis Pangloss would have priced in a skeptical risk premium on the tsunami of Treasury supply in the pipeline, given fiscal voodoonomics in Washington and the ominous drum beat of the trade war. Even though none of this is new to the Wall Street cognoscenti, higher interest rates on Uncle Sam IOUs, possibly a 5% yield on the 10 year US Treasury note, means a bloodbath for global debt markets and a spike in volatility that will shred private bankerji crafted, fiendishly complex structured note, which will be explosive landmines in investor portfolios. Fly, Robin, Fly. Up, up to the sky. See also What next for global risk assets and dollar rates? I expect the mother of all swap trades out of T-bonds into non-dollar, non-paper and safe haven assets as the cost of debt service for the planet's borrowers just went up dramatically. This also means illiquid assets like private credit and real estate could prove leprosy in the months ahead, especially in dollar pegged currencies where devaluation cannot act as a macro shock absorber. It was a little uncharitable for Moody's to stiff Trump with this credit bombshell after he just won $2 trillion in commitments to invest in the US from three Gulf petro states. It would be a national disaster if Qatar yanked the yummy $400 million gold plated Boeing 747 that Trump desperately needs as his post-retirement aerial Presidential Library to jet across the world. Young man, there's no need to feel down. I said, young man, pick yourself off the ground Matti trade du jour? Short greenback, bear steepners in Bondland, short crazy val US equities, short Tesla (TSLA) since you are nothing but a hound dog since DOGE only cut the flab by $150 billion and not the $2 trillion Elon promised Planet MAGA. Short Mag-7, short real estate, short private credit, long gold, long crypto, long sterling, long EM. Also published on Medium. Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Arabian Post
05-05-2025
- Business
- Arabian Post
My bearish King Dollar and black gold trades are money gushers!
Matein Khalid I have not exactly been reticent in my conviction since last autumn that King Dollar was on the precipice of a seminal monetary regime shift that could mean 40% downside risk on its trade weighted index, as in 2001-06. Yet not in my wildest dreams did I anticipate that the New Taiwan dollar would surge 8% against the greenback, its best performance in 42 years, in only 2 sessions, boosted by a FX short covering squeeze on the prospect of an imminent Trump-Xi trade deal and the repatriation of funds back to the PRC's Renegade Province after an epic dump of American assets. The biggest bang for the buck of the anti-dollar band wagon on Planet Forex now moves from the G-10 constellation to the rock and roll, lock and load world of emerging market FX. Who is the next obvious candidate for a pop against the buckeroo? The South Korean won, the Polish zloty and once the political calculus forces Lula to drop out of the 2026 election, the Brazilian real. The Indian rupee has stopped falling at 84 even though Modi has dawned white gloves for his next 'surgical strike' on Pakistan. For now, the Aussie dollar is a buy on Albanese's landslide win and could hit 0.70 if Trump inks a China deal as a gift to the world to celebrate his 79th birthday on June 14, 2025. Vive le roi et gagnant Orange! It was no surprise that the People's Action Party (PAP) will continue to rule Singapore with Lawrence Wong as its 4th PM since the state was born after the Father, the Son and the Holy Goh. The Sing dollar is Asia's Swissie and I would rather trust my savings to the anti-inflation, pro stability, monetary mandarins of the MAS rather than the Yessir, No-sir, Three Bags Full Sir MAGA creepo whom Trump will anoint as Fed Chairman to succeed Powel and inflate America's obscene debt until the CPI reaches 6% or higher. See also My rationale for $5,000 an ounce Auric before this cycle ends I do not want to sound like a broken record but my current project du jour is to research the world's lowest cost, longest life reserves silver mines with no output hedging overhang. After all, it was not profitable to be a dollar bull in 1978 and the ghost of the Hunt brothers tell me that the white metal was a parabolic monetary paydirt in 1979 and could well be the same in 2026. Prince Abdulaziz has tanked the price of Brent crude, down 4% to 58 a barrel by yet another OPEC supply surge decision. Saudi Arabia has escalated its price war and strategy to preserve downstream market share from OPEC+ cheaters Kazakhstan and Iraq while positioning the Kingdom for the imminent end of sanctions on Russia after the Ukraine peace deal and even Iran if the smoke signals from the Muscat negotiations bear fruit on the White House lawn as Begin/Sadaat and the Rabin/Rafat handshakes did all those years ago. All bets are now off for downside risk in crude oil Also published on Medium. Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Yahoo
04-05-2025
- Business
- Yahoo
Is The Damage to the Dollar's Status Permanent?
President Donald Trump's tariff policies and attacks on the Federal Reserve have sown doubts that U.S. assets are as safe as they have been historically. This threatens the dollar's status as the most widely used currency in global trade and weakens the dollar against a basket of foreign currencies. However, analysts say it is unlikely to substantially shift the dollar's role in the global investors recover from a volatile month of tariff headlines, the lingering question on Wall Street is how much the U.S. dollar's status as the pre-eminent global currency has weakened. 'King Dollar' is unlikely to be dethroned anytime soon given the lack of a reasonable alternative, analysts say. The dollar remains the most widely used currency in global trade, a role it's held since the aftermath of World War II, and past efforts to replace it have sputtered. Even so, President Donald Trump's tariff policies and attacks on the Federal Reserve have sown doubts in global financial markets, fracturing that dominance. While he's since eased up on both counts and U.S. stock markets have somewhat recovered, the doubts among global investors don't seem to be fully going away. 'It is hard to put the genie back in the bottle once such concerns are raised,' Morgan Stanley strategist Vishwanath Tirupattur wrote in a note to clients last week. However, he wrote, 'practical realities' will make it difficult to massively shift the dollar's role. Since the dollar is integral to global trade, countries and their central banks hold large amounts of dollars in their coffers. The U.S. dollar made up about 57% of foreign exchange reserves last year, according to the International Monetary Fund, compared to 20% for the Euro, 6% for the Japanese yen and 5% for the Pound sterling. The U.S. dollar was involved in about 90% of transactions in 2022 in the market where investors and companies trade foreign currencies, according to the Bank for International Settlements. There is 'really no alternative' to the dollar, said Brent Coggins, chief investment officer at Triad Wealth Partners in Kansas. The Euro is 'very fragmented,' China's currency doesn't float freely in markets and the yen 'doesn't have scale' to compete, he said. Dollar dominance has long irked some countries—and not just those subject to U.S. sanctions such as Russia or Iran. In the 1960s, a French official said the dollar's reign gives the United States an 'exorbitant privilege,' a moniker that's stuck ever since. More recently, the BRICS countries—which include Brazil, Russia, India, and China—have reportedly dropped the idea of developing a common currency even as they seek to bolster their local currencies in trading arrangements rather than the U.S. dollar. It was the latest victory for the U.S. dollar, which Coggins noted has thus far outlived a series of would-be alternatives. 'Even though it's going through a disruption right now and people are challenging it, it's dealt with challenges before, and it's always come out ahead,' Coggins said. 'We don't see this being any different.' Despite its historical dominance, the dollar is up against a broader 'confidence crisis' in U.S. assets, said Arun Sai, senior multi-asset strategist at the European firm Pictet Asset Management. Investors are questioning whether U.S. Treasury bonds—which the government issues to finance its deficits—are still the 'safe haven' they used to be. They're also shedding some of their holdings in U.S. stocks, with tech firms getting hit hard and worries over the U.S. economy clouding the outlook for others. The selling of U.S. dollar assets has pressured the dollar, which has weakened 8% this year against a basket of foreign currencies. Some analysts think the worst of it may be over. The dollar sell-off was 'atypical and likely temporary,' Wells Fargo international economist Nick Bennenbroek wrote in a research note. While Sai said the U.S. financial markets and 'absolutely exceptional companies' still warrant investment, global asset managers like Pictet are rethinking their heavy U.S. exposures and weighing alternatives. Some are buying gold, which is hitting record highs. German bonds are also a popular option for those seeking a safe haven. Emerging markets are also seeing inflows. Stocks closer to home are becoming a more attractive option as U.S. uncertainty rises, Sai said, adding that Trump's policies have 'incentivized capital to stay domestic.' When looking to deploy cash, Sai said he's weighing assets in Europe and the U.K. 'a little bit more than I would have last year.' However, that could turn around, analysts said. 'We certainly understand why financial markets may be interested in reallocating away from U.S. assets at this particular time, but we ultimately think this shift is tactical rather than a fundamental reassessment of U.S. assets,' Bennenbroek wrote. Read the original article on Investopedia Sign in to access your portfolio
