He dollar index is on its way to registering the worse performance during the first 100 days of an American presidency from the Nixon erawhen USA abandoned the Gold Patron and went to a floating exchange rate.
The American dollar index lost almost 9% between January 20, when Donald Trump returned to the White House, and on April 25, which places him on the road to register the greatest loss until the end of the month from at least 1973. The first 100 days of presidents’ mandate in recent decades have been characterized by the strength of the country’s currency, With media yields close to 0.9% between 1973, when Richard Nixon began his second term, and 2021, when Joe Biden assumed the position.
Conceived as a temporary measure, The so -called “Nixon Shock” of 1971 caused the fall of the dollar, ending in fact to the fixed exchange rate system Bretton Woods established after the end of World War II.
The impact on the dollar with the arrival of Donald Trump
At the beginning of his second term, Trump has completed several campaign promises, imposing new tariffs and intensifying his rhetoric against China and other commercial partners of the United States. Its tariff policy led investors to accumulate assets outside the US, which weakened the dollar and promoted other currencies, in addition to gold. The euro, the Swiss Franco and the Yen have appreciated more than 8% each against the dollar since Trump’s return to the presidency.
“The omnipresence of the US dollar and its role in commerce and international finances came accompanied by deep confidence in US institutions, commercial and capital barriers, as well as a predictable foreign policy,” said Bipan Rai, general director of BMO Global Asset Management. “And now? There are clear indications of erosion that point to a Change in world assets allocation trends that do not favor the US dollar. We believe it is a structural change, ”he said.
Trump’s political initiatives also increased the risk of a recession in the US, along with an acceleration of inflation, which limits the scope of possible cuts of interest rates by the Federal Reserve.
Trump’s comments about the president of the FED, Jerome Powell, especially his threat of dismissing him, put in alert investors and increased concern for the independence of the Central Bank. Trump subsequently stated that he had no intention of saying goodbye to Powell.
Expectations with the dollar: Will it continue to lose value?
As a result, UBS Group AG cut its projection for the dollar for the second time in less than two months. The analysts pointed out that the dollar’s performance depends on the result of the confrontation between the US and China, which has not had a record had many advances in recent weeks.
Deutsche Bank Ag warned this week of a structural bearish trend of the dollar in the coming years, which could carry the American currency at its weakest level in more than a decade compared to the euro.
Speculative operators, including coverage funds and asset managers, They are betting against the dollar. The group has the greatest amount of short positions in the dollar since October 2024, with bass bets on the US currency for about US $ 10,000 million during the week that ended on April 15, according to data from the Commission of Commerce of Futures of Futures of raw materials.
Source: Ambito
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