The US dollar has kicked off the decade with its worst first half in over 50 years, experiencing a 10.8% depreciation against a basket of currencies. This performance, unmatched since 1973, is largely a result of mounting geopolitical crises and the disruptive impact of Donald Trump’s trade war. The currency’s diminished appeal as a safe haven is evident as investors express worries about the US economic trajectory.
The pound has benefited from the dollar’s weakness, climbing to a three-year high. While the dollar faltered, broader market returns were surprisingly robust, with risky assets showing quick reversals after any sell-offs. The S&P 500, after an initial downturn triggered by “Liberation Day” tariffs, staged a historic comeback to reach a record high by the close of June. This rally underscores a market sentiment that anticipates a softening of Trump’s more extreme trade measures.
