Daily Brief – US Dollar

US Dollar

The first 7 months of the year has been characterised by a weakening USD down 13% and largely prompted by both the threat and actuality of US tariffs and the damage that they will cause to the US economy. On top of that, the US Administration has been consistent in talking down the USD. So now both of those factors are in the market price, does that mean the Dollar stabilises or even strengthens? In short, the answer is no. Tariffs will negatively impact the US economy for years, and the present US Administration is set to remain in office for a minimum of 3.5 years. On top of that is the strengthening supposition that the Federal Reserve is beginning to lose its independence which in turn will weaken the USD further. The 25bp rate cut is now 85% certain in September but what after that? Treasury Bessent is calling for further cuts totalling 150bps after that. All in all, the Dollar will continue weakening but at a slower pace than that of the first 7 months of 2025.

EUR/USD 1.1659.

Members of the 4%+ and the 2%- Clubs

We are of course talking real GDP growth in 2025. The top 50 can be broken down into 3 sections : 4%+, the 2-4% and the 2%-. Class leader of the 2%- is the USA and features the UK, Germany, Australia, Switzerland, France and Mexico. Spain, Ireland, Brazil and Taiwan stand out in the 2-4% range. In the world leading club of 4%+, China, Vietnam, Philippines, Argentina and Indonesia tell the story of those global regions. But it is board leader India that is streaking ahead at 6.4% – for the moment at least until TT kick in.

GBP/USD 1.3489.

EU versus USA

While the USA managed a robust 0.7% expansion in its economy in H1 2025, the EU was a mixed picture with Class Leader Spain up 0.7%, back of the class Ireland down 1.0%, and big economies Germany and Italy down by 0.1%. Overall, the EU managed an anaemic increase of 0.1%. The question is whether the EU is indeed going to deliver on economic growth or whether it may only indirectly benefit due to the headwinds encountered by the USA, or lastly, whether the sideways performance continues. At best it’s inconclusive but those are the potential outcomes.

EUR/GBP 0.8644.

Kilauea, Hawaii

Some readers may recall that the volcano on Kilauea spectacularly erupted on July 20. Volcano nuts are excited that scientists are predicting further major explosions and are making their way to the Hawaii Volcano Park to witness that at first hand. For the rest of us, we will be able to watch it online as live streams are being set up by the US Geological Survey.

EUR/JPY 172.20.

(I can’t Get No) Satisfaction

60 years ago today this foot stomper from, the Rolling Stones was released on an unsuspecting USA. The band is coy about disclosing the amount of royalties earned from this or indeed any of their considerable library of work but thanks to AI we have the answer: a lot.

I can’t get no satisfaction
I can’t get no satisfaction
‘Cause I tried and I tried and I tried and I tried
I can’t get no, I can’t get no

When I’m driving in my car
And a man talks on the radio
He’s telling me more and more
About some useless information
Supposed to fire my imagination

I can’t get no
Oh no no no
Hey hey hey
That’s what I said

I can’t get no satisfaction
I can’t get no satisfaction
‘Cause I tried and I tried and I tried and I tried
I can’t get no, I can’t get no

When I’m watching my TV
And a man comes on and tells me
How white my shirts can be
But he can’t be a man ’cause he doesn’t smoke
The same cigarettes as me

I can’t get no
Oh no no no
Hey hey hey
That’s what I said

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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