Trump’s Trade Bombshell: Dollar Dips to Multi-Decade Low, Shakes Global Markets

Donald Trump’s assertive trade policies have sent shockwaves through global financial markets, resulting in the US dollar’s worst first half-year performance in over 50 years. The greenback has depreciated by 10.8% against a basket of currencies, hitting its lowest level since March 2022. This currency sell-off reflects widespread concern that the US’s economic direction under Trump is undermining the dollar’s traditional safe-haven status.
The administration’s fiscal plans, particularly the “big beautiful” budget bill and its potential impact on national debt, have added to investor anxieties. The pound, in contrast, has surged to a three-year high of $1.37, benefiting from the dollar’s weakness. The market turbulence, while initially severe, saw a surprising turnaround for US equities, with the S&P 500 clawing back losses to finish June at a record high. This rebound, dubbed the “Taco” trade, suggests investors anticipate a tempering of Trump’s more aggressive stances.