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5h ago

U.S. Dollar Marks Worst First-Half Drop Since 1973 as Markets Eye Fed Cuts and Tariff Risks

Heightened Fed easing bets collide with trade uncertainty ahead of the July 9 expiration of Trump’s tariff pause

Smythson sold its New Bond Street store last year during the slowdown in the global luxury sector
US senators are expected to vote into Tuesday morning on a series of amendments to President Donald Trump’s “Big Beautiful Bill”
The U.S. Capitol building in Washington, D.C., U.S., June 27, 2025. REUTERS/Elizabeth Frantz/File Photo

Overview

  • The U.S. Dollar Index fell to about 96.7, sliding over 10% in the first half of 2025 for its steepest start since free-floating currencies began in 1973.
  • The euro reached near $1.179, its strongest since September 2021, and sterling hovered around $1.374, close to a three-and-a-half-year peak.
  • Traders have priced in roughly 67 basis points of Federal Reserve rate cuts this year ahead of June’s nonfarm payroll report and Fed Chair Powell’s Sintra forum remarks.
  • President Trump’s $3.3 trillion tax-spending bill faces Senate divisions and the impending July 9 end to his tariff pause has heightened trade policy uncertainty.
  • Gold has climbed about 25% year-to-date as a safe-haven asset and European equities outpaced U.S. markets, with the Stoxx 600 up 7% versus the S&P 500’s 5% gain.