US Dollar weakness may take a life of its own
Only temporary respite – US Treasury Secretary Scott Bessent told the media that his country maintains its strong Dollar policy, which boosted the Greenback. Later, the Federal Reserve (Fed) left interest rates unchanged and signaled it was in no rush to cut them at upcoming meetings. Nevertheless, the US Dollar resumed its decline and Gold hit fresh new highs.
Why it matters
Taking the life of its own? – The fall of the US Dollar can be attributed to president Trump's acceptance of its fall, erratic tariff threats and uncertainty about the independence of the Fed. Investors seem to tune out of the Commander-in-Chief's commentaries and also shy away from America's currency, almost regardless of what he says. That may spill to a sell-off in Bonds and eventually Stocks, despite the country's AI lead.
What’s next
Supreme Court as the savior – Trump will try to do whatever he wants, but Justices in Washington may eventually provide necessary guardrails for things to stabilize. Rulings on the firing of Fed Governor Lisa Cook and on the legality of certain duties imposed by the White House are critical. If the court sides with Cook and strikes down the duties, normality could return. Conversely, going with the president would add to the US Dollar's downfall. When will we hear the verdicts? Hopefully sooner than later. In the meantime, the debasement trade continues.