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US dollar has worst first half in more than 50 years amid Trump tariffs
2025 has been a rough year for the dollar though.
It has sled 10.8% in the first six months of the year, its worst first-half performance since 1973 against a basket of rival currencies.
Stephen Innes, managing partner at SPI Asset Management, says the dollar is experiencing a ‘structural unwind’ as Donald Trump alarmed investors with his trade wars, and attacks on the Federal Reserve.
Trump’s tariff timebombs, fiscal bazookas, and the creeping perception of Fed capture have all coalesced into one ugly truth: the dollar is no longer the safe-haven default, at least not for now.
This wasn’t supposed to happen. The consensus playbook had the dollar strengthening as Trump’s protectionist blitz torched everyone else’s economies. But instead of Europe or Asia cracking first, it’s the U.S. that’s lost the narrative. Growth risks have migrated stateside, and rate-cut expectations have exploded, dragging yields lower and scaring off global capital.
ShareIntroduction: London markets celebrate strong H1
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s a new month, and also the second half of the year. And the London stock market can look back on its strongest first six months of any year since 2021.
The FTSE 100 share index has gained 7.2% so far this year, its best January-June performance in four years, and its third-best first half to a year in the last decade.
Stocks in London have recovered from their trade war shock in early April, helped by Donald Trump’s 90-day pause to new tariffs which ends next week. Britain’s trade deal with the US, which kicked in yesterday, has also helped the mood.
Danni Hewson, AJ Bell head of financial analysis, says:
“Considering the massive market wobble which followed Donald Trump’s ‘Liberation Day’ speech the fact that the FTSE 100 has turned in its best half-time performance since 2021 is something worth shouting about.
“Big share price falls grabbed headlines at the start of April as many UK investors watched the value of their pensions fall, but despite the geopolitical uncertainty and tariff turmoil London markets have thrived in the second quarter.
The FTSE 100 was lifted by strong gains among defence companies; BAE Systems has gained over 60%, while Babcock has more than doubled, as rising geopolitical threats lift their order books.
The smaller FTSE 250 index had a strong second quarter to the year, gaining over 11% in April-June, Reuters reports.
Other global markets also recovered from their trade war slump, with the US S&P 500 index ending June at a record high.
The agenda
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7am BST: Nationwide’s UK house price index for June
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8am BST: Bank of England governor Andrew Bailey to give an interview to CNBC
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9am BST: Eurozone manufacturing PMI report for June
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9.30am BST: UK manfuacturing PMI report for June
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10am BST: eurozone inflation estimate for June
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2.30pm BST: Andrew Bailey, ECB president Christine Lagarde, Fed chair Jerome Powell, Bank of Japan’s Kazuo Ueda and Bank of Korea governor Chang Yong Rhee speak at the ECB Forum on Central Banking in Sintra
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3pm BST: JOLTS report on US job creation