Daily Brief – US Dollar

Humphrey Percy
Chairman and Founder
Wed 18 Jun 2025

US Dollar

All the talk of the USD having had its day may be gaining in credence every day that goes by with the POTUS and his Administration seemingly determined to dismantle the post WW2 global currency order and depreciate the USD, but most people operate in a much shorter timeframe than the time it will take to engineer a global shift in USD’s strategic importance. Shorter term currency decision making encompasses asset acquisition in the current financial year, repatriation of profits, taking a vacation, sending a lucky child to study in a foreign country or electing to emigrate as examples. For the twin prime reasons of ultra high geo-political uncertainty, and the lack of a credible alternative given that USD accounts for 88% of one side of all currency transactions globally, for the next 6 months at least USD remains a currency to buy rather than sell.

EUR/USD 1.1566.

Germany

Yesterday the Leibniz Centre for European Economic Research released its indicator of economic sentiment which measures the mood of German companies and that showed a big improvement in May over April. This uptick in sentiment was also reported by the Kiel Institute and the Ifo Institute so it seems its cheer all round in Germany. So in short, the Germans have seen beyond TT or Trump Tariffs and are focused on the government fiscal stimulus through the removal of the debt brake plus the immense increase in defence spending, which has taken Germany to the position of being the 4th largest military spending nation.

GBP/USD 1.3562.

Japan

Despite the numbers not adding up at least to a conventional markets observer, the Bank of Japan concluded its policy meeting yesterday by deciding to leave its 0.5% interest rate unchanged. The numbers that do not add up are as follows: 30 year Japanese government bonds have risen sharply and now yield 3.2%, annual consumer price inflation is almost 4% and net government debt stands at 135% of Japan’s GDP.

EUR/JPY 167.34.

EURO

Mme Lagarde, President of the ECB wrote a piece for the Financial Times yesterday suggesting that this is the time for the global Euro. While the piece was aspirational, and as could be expected from Christine Lagarde was sufficient to be credible with its grasp on reality, it certainly did not contain the point that for EUR to replace USD as the global currency of choice, there would have to be legal, political and economic changes across the EU of a magnitude that go far beyond what one hardheaded hedge fund manager sneered as being merely “fine words.”

GBP/EUR 1.1726.

Dreams

This song by Fleetwood Mac went straight to Number One this day in 1977 and was incidentally the super group’s only US number one. Written by Stevie Nicks who underlined her cred as a member of Fleetwood Mac as well as her street smarts and commercial acumen by announcing that it took her all of 10 minutes to write it at a recording studio in Sausalito, California.

Now here you go again
You say you want your freedom
Well, who am I to keep you down?

It’s only right that you should
Play it the way that you feel it
But listen carefully to the sound
Of your loneliness

Like a heartbeat drives you mad
In the stillness of remembering
What you had and what you lost
What you had and what you lost

Thunder only happens when it’s raining
Players only love you when they’re playing
Say women, they will come and they will go
When the rain washes you clean, you’ll know

You will know, you will know
You will know, you will know

Now here I go again
I see the crystal visions
I keep my visions to myself

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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