US Dollar Suffers Historic First-Half Slump Amid Trump Policies; S&P 500 Hits Record High

The US dollar has recorded its worst first half-year performance in over five decades, plummeting 10.8% against a basket of currencies since the start of 2025. This historic decline, the most significant since 1973 for a first half and since 1991 for any half-year period, has pushed the dollar index to its lowest point since March 2022.

Driving the dollar’s sell-off are investor concerns over President Donald Trump’s economic policies, including his administration’s escalating trade war, tariffs, and predictions of soaring national debt. Economists and analysts point to fears that these policies threaten the dollar’s traditional safe-haven status, with the pound reaching a three-year high against the greenback and the euro gaining 5%.

Despite the dollar’s woes and a turbulent start to the year marked by tariff scares and market volatility, major stock markets have shown surprising resilience. The S&P 500 index, after a sharp dip in April following ‘Liberation Day’ tariff announcements, staged a historic rebound to reach a new record high by the end of June. This recovery has been attributed to the ‘Taco’ trade (Trump always chickens out on tariffs), ‘Fomo’ (fear of missing out), and strong conviction in future interest rate cuts by the Federal Reserve, coupled with optimism around AI-driven earnings growth.

While US markets lagged some European counterparts—the S&P 500 gained 5% compared to the pan-European Stoxx 600’s 7% and Germany’s Dax’s 20%—the first half of 2025 has been defined by significant shifts in investor preferences. Gold also emerged as a strong performer, with its price jumping 25% as investors sought out alternative safe-haven assets amidst the geopolitical and economic uncertainty.

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