The Dollar Declines: Global Currencies Rise as U.S. Trade Policy and Rate Cut Expectations Bite

Economic

Forex

Summary:

The U.S. dollar has weakened nearly 10% in 2025, hitting a three-year low amid trade policy uncertainty and anticipated Federal Reserve rate cuts...

Global Shifts Triggered by Dollar’s Weakness

The U.S. dollar's rapid depreciation—driven by shifting trade policies under President Trump and growing consensus on upcoming Fed rate cuts—has triggered notable realignments in currency markets. The ICE Dollar Index (DX=F) has dropped to 97.46, pushing other currencies sharply higher in relative terms.

Among the standout performers are the Swedish and Norwegian crowns. Sweden’s currency has surged 14% year-to-date, the strongest half-year performance in half a century. Norway’s crown follows closely with a 12% gain. Yet, against the euro, their appreciation is far more subdued—underscoring that their strength is more about U.S. dollar fragility than domestic economic momentum.

Safe-Haven Gains Come with Deflationary Costs

The euro, Swiss franc, and Japanese yen have all gained roughly 10% this year. However, these gains bring side effects. Swiss inflation turned negative in May, raising the specter of deflation and possibly pushing the Swiss National Bank to consider rate cuts into negative territory once again. The European Central Bank, too, now watches the euro’s rise warily, fearing it could dampen inflation and hurt exports.

Despite its appreciation, the Japanese yen remains 30% weaker than its end-2020 value, leaving Japan caught between the optics of a stronger currency and its historical export competitiveness. With U.S.-Japan trade talks ongoing, Japan is navigating a delicate balance between monetary policy and geopolitical signaling.

Capital Flows Rebalance Toward ‘Factory Asia’

Asian economies are witnessing a reversal of capital flows that long favored U.S. Treasuries. Taiwan’s dollar soared 10% in two days in May alone and has appreciated 12% this year. The Korean won has gained similarly, and Southeast Asian currencies—including Singapore’s dollar, Malaysia’s ringgit, and Thailand’s baht—are up around 6%.

However, China’s yuan lags behind, with only a 2% gain offshore. This reflects tight central bank management and sensitivity to U.S. tariffs. While not branded a currency manipulator in the latest Treasury report, China’s cautious approach is likely a strategic hedge amid ongoing trade friction.

Argentina stands as the outlier, with its peso down 15% following April’s adoption of a new floating regime. The slide has been orderly, and recent support from the IMF ($20 billion) provides a backstop. Mexico’s peso, conversely, has rebounded to near yearly highs as tariff concerns fade and investor confidence returns, making it a barometer of sentiment toward U.S.-Latin America trade ties.

Sterling’s Strength Tempered by Domestic Risks

The British pound has risen nearly 9% against the dollar, buoyed by merger activity and relatively strong capital inflows. Yet, expectations of rate cuts from the Bank of England and persistent fiscal concerns have capped further gains. Analysts suggest sterling could underperform compared to other majors, as macro risks—including softening GDP—remain elevated.

The dollar’s decline is less about the strength of other economies and more about weakening confidence in U.S. monetary and fiscal direction. The anticipated Fed rate cuts, coupled with a chaotic and uncertain trade regime, are undermining the dollar’s status as a global safe haven. While beneficiaries range from Scandinavia to Southeast Asia, the sharp moves are also triggering headaches—from deflation in Switzerland to inflation management in Japan and China.

If this trend persists, it may compel policymakers worldwide to reevaluate interest rate paths and currency interventions—reshaping global monetary coordination in the second half of 2025.

Source: Reuters

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Warren Takunda

Cryptocurrency

Key points:

Bitcoin hits its anticipated $107,000 low before heading higher as US inflation data boosts bulls.

US dollar strength suffers as inflation continues to slow beyond expectations.

BTC price expectations include new all-time highs before the end of the month.

Bitcoin bounced near $107,000 at the June 12 Wall Street open as slowing US inflation data punished the dollar. Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_1

Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

US PPI beat sparks Bitcoin relief bounce

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD bucking a day of downside after reaching $106,600 on Bitstamp.

Fresh strength followed promising numbers from the US Producer Price Index (PPI), which came in below expectations to show the lowest increase since September 2024.

That trend itself repeated results from the Consumer Price Index (CPI) the day prior — a double tailwind for crypto and risk assets.

As Cointelegraph reported, cooling inflation notionally gives the Federal Reserve room to lower interest rates faster and sooner, something which would aid liquidity inflows to crypto and risk assets.

The Fed has remained hawkish in its stance on policy for 2025, however, despite protests from US President Donald Trump. Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_2

Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_2

Fed target rate probabilities (screenshot). Source: CME Group

A look at the latest data from CME Group’s FedWatch Tool now shows markets pricing in the next Fed rate cut at its September meeting. The June 18 meeting of the Federal Open Market Committee (FOMC) remains tipped to offer no change in rates.

As a result of the inflation numbers, US dollar strength took a fresh hit, with the US dollar index (DXY) dropping to its lowest levels since March 2022. Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_3

Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_3

US dollar index (DXY) 1-month chart. Source: Cointelegraph/TradingView

Commenting on the current mood, trading firm QCP Capital remained focused on the US-China trade deal while concluding that the trend overall favored crypto bulls.

“Despite a modest pullback, macro conditions remain constructive for further institutional engagement and capital deployment into digital assets,” it summarized in its latest bulletin sent to Telegram channel subscribers.

$116,000 June BTC price target in play

Bitcoin traders were meanwhile uncertain about short-term BTC price action after BTC/USD fell nearly $4,000 in 24 hours.

“At this point I'm fairly certain that if price breaks either the current monthly high or low, that it will keep trending that direction for the rest of June (and possible beyond),” popular trader Daan Crypto Trades predicted in part of his latest analysis on X. Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_4

Bitcoin Bulls Halt $4K BTC Price Dip as US Dollar Hits New 3-Year Lows_4

“Eyes on those levels.”BTC/USD 1-day chart. Source: Daan Crypto Trades/X

Previously, market participants had anticipated a drop to $107,000, with notorious Hyperliquid trader James Wynn forecasting the day’s bounce zone.

“As of now, structure is still bullish. Bitcoin rejected local supply & is now pushing into demand around 106-107K,” fellow trader Killa continued in his own X post.

“This is quite a important level in terms of market structure, if we are unable to hold, we likely fill the CME gap below.”BTC/USD chart. Source: Killa/X

Killa added that he expected new all-time highs of up to $116,000 to come before the end of June.

Source: Cointelegraph

Risk Warnings and Disclaimers

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Adam

Economic

Stocks

In May, three stocks that released earnings stood out due to their massive sales beats. These names are mid-cap companies with market capitalizations between $2 billion and $10 billion.

Companies of this size are typically less covered by Wall Street analysts, creating larger opportunities for earnings surprises. Indeed, these companies surprised, leading to huge moves in shares.

TMDX’s Sales Rout Forecasts, Boosts Full Year Guidance

One stock that markets have had a love-hate relationship with over the last 52 weeks or so is TransMedics Group (NASDAQ:TMDX). The healthcare company has beaten sales estimates and seen shares rise afterward in three out of its last four releases. However, the one time that the company missed estimates over this period resulted in dire consequences for the stock.

After the company’s Q3 2024 release came out at the end of October 2024, shares dropped 30% in one day.

Luckily for shareholders, TransMedics delivered in its latest release. The company’s Q1 2025 sales came in at over $143 million, around 16% higher than the $123 million analysts expected. This resulted in revenue growth of over 48%, massively faster than the approximately 27% analyst forecasts implied.

This revenue beat enabled the company to post adjusted earnings per share (EPS) of $0.70, more than twice the expected amount. TransMedics also increased the midpoint of its full-year revenue guidance by $34 million, adding fuel to its fire.

The company’s current full-year revenue forecast of $575 million implies growth of 30% compared to 2024. Shares rose nearly 20% in the day following the release. As of the June 10 close, the stock remains down around 20% from its all-time high closing price reached in August 2024.

ECG: +20% Sales Beat, Backlog Up 41% on Data Center Demand

Next up is Everus (NYSE:ECG). This mid-cap construction services stock also handily beat expectations on sales, posting revenue of nearly $827 million in Q1. This was around $150 million higher than forecasted, resulting in a sales beat of over 22%. Sales growth was 32%, approximately four times faster than the Wall Street-anticipated growth of 8%. Aided by this topline number, the company’s non-adjusted EPS rose by 31% to $0.72. Analysts thought the figure would decline by 22% to $0.43.

Shares rose 17% on the day after the results. Although analyst coverage on this stock is relatively light, those that do cover it see a solid amount of upside in shares. Stifel Nicolaus and DA Davidson both raised their targets after the results. The average of their targets is just under $70, implying upside in shares of 16% from their June 10 closing price.

Stifel noted the 41% increase in the company’s order backlog as a reason for boosting its target to $70. The company’s backlog of $3.1 billion is slightly more than all the revenue generated over the last 12 months. This should help give the company a revenue floor going forward, providing it with a solid opportunity to continue growing sales strongly.

The company’s Electrical and Mechanical (E&M) backlog grew particularly fast at 46%. This was largely due to demand from data center buildouts, showing that the company is participating in this growing part of the economy.

Excelerate’s LNG Business Booms in Q1

Last up is Excelerate Energy (NYSE:EE). Excelerate works in the liquefied natural gas (LNG) industry. It has one of the largest fleets of floating storage and regasification units (FSRUs) in the world. FSRUs are massive vessels that can not only transport LNG but can also convert it back into gas and deliver it to land-based receiving terminals.

The company’s Q1 sales were $315 million, beating estimates of $208 million by over 51%. Revenues grew by over 57%, compared to expectations of just 4% growth. Shares rose 10% afterward.

Jefferies recently initiated the stock with a $39 price target, implying upside of nearly 27% from its June 10 closing price. This reflects the rising global demand for LNG and the expectation that the company’s vessels will receive more valuable contracts once their current agreements expire.

However, others fear that LNG supply will significantly outstrip demand by 2030. This would put downward pressure on prices, potentially hurting Excelerate’s investment thesis.

Overall, these three stocks had some of the most impressive sales beats in the market in May. Everus stands out in particular due to its rapid backlog growth, which creates an opportunity for sustained sales growth going forward.

Source: investing

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Gerik

Economic

Contrasting Forecasts Highlight Vast Ideological Divide

The Congressional Budget Office, the Tax Foundation, and the Penn-Wharton Budget Model all estimate that Trump’s legislative package—primarily composed of tax cuts and tariff-driven revenue plans—will deepen deficits by roughly $3 trillion over ten years. These institutions rely on conservative economic assumptions, standard scoring models, and historic precedents.

In stark contrast, the White House projects a fiscal surplus of $6.7–$8 trillion, justifying it through overly optimistic growth expectations (3% annually), aggressive revenue forecasts from tariffs ($2.8 trillion), and cost-free assumptions for tax cuts. This divergence isn’t just technical—it reflects an ideological conflict over the role of government forecasting and economic orthodoxy.

Optimism Anchored in 3% Growth and Tariff Windfalls

The administration’s fiscal argument hinges largely on two controversial pillars. First, it assumes annual GDP growth of 3% for a full decade—a pace well above consensus estimates of 1.6% to 2%. Economists argue that the bill’s structure (mostly an extension of existing tax cuts) lacks sufficient stimulus to generate such sustained acceleration.

Second, the White House counts on nearly $3 trillion in tariff revenues while ignoring the CBO’s warning that such trade measures would shrink the economy and raise inflation. This selective use of data—accepting favorable revenue projections while ignoring downside macroeconomic risks—highlights internal contradictions in the administration’s narrative.

Internal Contradictions Undermine Policy Credibility

Critics argue the White House is “double counting” benefits. Temporary tax cuts are treated as permanent revenue gains, while tariffs are assumed to yield stable long-term revenue despite ongoing volatility and legal challenges. Moreover, potential inflationary effects from tariffs and their drag on consumer spending are largely dismissed.

In congressional hearings, Treasury Secretary Scott Bessent distanced himself from the most extreme claims, stating that “it remains to be seen” whether the bill will add to the debt—an implicit acknowledgment of its fiscal ambiguity. When asked to name an independent expert who supports the administration’s view, he cited Arthur Laffer, a long-time supply-side advocate, drawing laughter from lawmakers.

Fiscal Confidence Erodes as Assumptions Collide

The administration’s persistent dismissal of mainstream economic opinion adds political risk to fiscal uncertainty. While Trump's budget chief Russ Vought frames the plan as a “coherent fiscal agenda,” even Republican lawmakers have balked at relying on assumptions not shared by the CBO or their own budget offices.

As negotiations continue, the legal fragility of certain tariffs—especially those linked to Trump’s controversial “Liberation Day” declarations—adds more volatility. An appeals court has temporarily upheld them, but any judicial reversal could further derail revenue assumptions.

A Politicized Gamble on Growth

The White House’s vision is ultimately a bet: that a combination of tax cuts, tariffs, and deregulation will trigger a productivity boom strong enough to offset revenue losses. However, economists argue that even under rosy conditions, such outcomes are historically rare and policy-sensitive.

Unless growth surprises to the upside or a global realignment dramatically benefits U.S. exports and industrial productivity, the promised surplus may never materialize. Instead, the U.S. risks entering a new era of debt-driven fiscal policy based more on political narrative than economic fundamentals.

Source: Reuters

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Daniel Carter

Bond

Economic

Investors are also awaiting a $22 billion auction later Thursday of 30-year bonds, seen as another test of investor demand for U.S. sovereign debt in light of concerns over the mounting federal deficit. Wednesday's auction of 10-year Treasuries pointed to healthy demand.

According to the Labor Department, total insured unemployment, or all people receiving benefits, overshot expectations to rise to 1.956 million workers, the highest level in nearly four years.

Meanwhile the annual reading of the Producer Price Index ticked one tenth higher to 2.6%, in line with expectations, even though a closely watched "core" reading, which the excludes volatile food and fuel categories, was cooler than the prior month's print.

Lou Brien, market strategist at DRW Trading, said he investors likely were reacting to labor market weakness and believed consumer price increases from President Donald Trump's trade wars were in the pipeline even if they had yet to materialize.

"There are many details in the labor market that have shown weakness for a long time," he said. "I think the move higher in the continuing claims and the weekly claims is starting to confirm some of that weakness."

"We're still anticipating there's gonna be some kind of a jump in prices. We keep thinking that month after month and nothing happens but I don't think that thought has left the market."

Chinese authorities on Thursday affirmed a trade deal reached this week with Washington, though specifics remain unclear.

The yield on the benchmark U.S. 10-year Treasury note (US10YT=TWEB) was last down 4.3 basis points to 4.371%. The yield on the 30-year bond (US30YT=TWEB) fell 4.3 basis points to 4.866%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes (US2US10=TWEB), seen as an indicator of economic expectations, was at a positive 46.6 basis points.

The two-year (US2YT=TWEB) U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 4.4 basis points to 3.901%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (US5YTIP=TWEB) was last at 2.295% after closing at 2.313% on June 11.

The 10-year TIPS breakeven rate (US10YTIP=TWEB) was last at 2.272%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

Source: Reuters

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Adam

Economic

Commodity

JP Morgan downplayed geopolitical concerns on Thursday and maintained its base case forecast for oil prices to stay in the low-to-mid $60s through 2025 and $60 in 2026, but said certain worst-case scenarios could send prices surging to double those levels.

U.S. President Donald Trump said on Wednesday the United States was moving personnel out of the Middle East because it "could be a dangerous place". He also said the U.S. would not allow Iran to have a nuclear weapon. Iran has said its nuclear activity is peaceful.

Increased tension with Iran has raised the prospect of disruption to oil supplies, with both sides set to meet on Sunday.

The geopolitical risk premium is already at least partially reflected in current oil prices, which are just under $70, trading about $4 higher than their estimated fair value of $66 for June, JP Morgan said in a Thursday note.

However, the analysts drew attention to certain worst-case scenarios, where the impact on supply could potentially extend beyond a 2.1 million barrels per day reduction in Iranian oil exports. Attention is focused on the risk that a broader Middle East conflict could close the Strait of Hormuz, or provoke retaliatory responses from major oil producing countries in the region.

"Under this severe outcome, we estimate oil prices could surge to the $120-130/bbl range," they said.

Brent crude futures were trading near $68.76 per barrel on Thursday, while U.S. West Texas Intermediate crude futures were at $67.14 per barrel. [O/R]

If nuclear negotiations fail and conflict arises with the United States, Iran will strike American bases in the region, Iranian Defence Minister Aziz Nasirzadeh said on Wednesday, days ahead of a planned sixth round of Iran-U.S. nuclear talks.

The U.N. nuclear watchdog's board of governors declared Iran in breach of its non-proliferation obligations on Thursday and Tehran announced counter-measures, as tensions rose in the Middle East.

source : Reuters

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Damon

Economic

The Federal Reserve's path to interest rate cuts starting in September appeared to widen on Thursday, after a pair of government reports pointed to cooler inflation and signs of potential weakening in the labor market.

U.S. producer prices advanced 2.6% in May from a year earlier, after rising 2.5% in April, the Labor Department reported. Taken together with tamer-than-expected increases in the Consumer Price Index in May, economists estimated that inflation by the Fed's preferred gauge of underlying price pressures, the core Personal Consumption Expenditures Price Index, likely rose in line with the Fed's 2% goal last month.Economists still expect the Trump administration's tariffs to push up prices and lift inflation later this year, but "the near-term trend remains favorable, enabling the (Fed) to signal next week that it still intends to begin easing policy again later this year," economists at Pantheon Macroeconomics wrote.

They estimate that core PCE rose by just 0.12% in May from April, based on the latest PPI and CPI data. Economists at other Wall Street firms issued similar estimates.

The Fed is nearly universally expected to leave its policy rate in the 4.25%-4.50% range at its June 17-18 meeting. Futures that settle to the Fed's policy rate show traders now expect a quarter-percentage-point reduction by September, with another such move likely in October. Before Thursday's data, traders had expected the Fed to wait until December to deliver a second rate cut. The U.S. central bank cut rates three times in 2024.A separate Labor Department report on Thursday showed initial weekly claims for jobless benefits held steady at a seasonally adjusted 248,000 for the week ended June 7, while continuing claims jumped to 1.951 million, their highest level since November 2021 and a sign that it is getting harder for unemployed workers to find a new job.

"Americans, especially recent graduates, are worried about how hard it is to find a job," said Heather Long, chief economist at Navy Federal Credit Union. "If layoffs worsen this summer, it will heighten fears of a recession and consumer spending pullback."