Dollar Weakens Again, Markets Return to "Weak USD Trade"
The US dollar weakened again on Wednesday, halting its brief rally, as markets increasingly traded in the "weak USD trade." The Bloomberg US currency indicator fell by around 0.3%, while gold and silver continued their record-breaking rally. Some market participants believe the dollar is no longer considered a primary safe haven, as investors prefer "real safe havens" such as precious metals.
The dollar's weakening occurred despite US Treasury Secretary Scott Bessent's assertion that the government remains committed to a "strong dollar" policy. Bessent's statement followed comments by President Donald Trump the day before, stating that he was comfortable with a weaker dollar because it benefits US businesses—comments that contributed to the dollar's sell-off.
Some analysts saw Bessent as attempting to calm the market without changing direction. Some viewed him as employing "strategic ambiguity": on the one hand, he was talking about a strong dollar, while on the other, the market perceived the government as still seeking a gradual dollar weakening to avoid a wild swing. Among the G10 currencies, the Australian dollar led gains against the US dollar, followed by the New Zealand dollar, while the Swiss franc also strengthened after hitting its strongest level since 2015.
The "dollar weakness trade" itself is essentially a bet that the dollar's purchasing power will continue to decline over the long term. The reasons for this are varied: concerns about unpredictable US policy, perceived excessive deficits, and perceptions of increasing US isolation. The Bloomberg Dollar Index has already fallen more than 2% this year, after weakening sharply by 2025—and as long as this narrative persists, pressure on the dollar is likely to remain. (az)
Source: Newsmaker.id
