Reference News Network reported on April 27 that according to a report from Bloomberg News Service on April 26, among the various data of the first 100 days of the U.S. presidency, an indicator measuring the dollar may perform the worst since the Nixon era. In the Nixon era, the United States abandoned the gold standard for the dollar and adopted a free-floating exchange rate system.

From January 20 (the day Donald Trump returned to the White House) to April 25, the US Dollar Index fell by about 9%, and it is possible to set at least the largest decline in the first 100 days of any president's term since 1973. From 1973 (Richard Nixon began his second presidential term) to 2021 (Joe Biden took office), over the years, the US dollar has been strong during the first 100 days of the presidential term, with the average return rate of US dollar index futures close to 0.9%.

The measure taken by the United States in 1971, known as the "Nixon Shock," was originally temporary, but it led to the devaluation of the dollar, effectively ending the Bretton Woods system established after World War II that implemented fixed exchange rates.

In the early part of his second presidential term, Trump fulfilled many of his campaign promises: he imposed tariffs, raising the tone against China and other US trading partners. His tariff policies caused investors to buy assets overseas, thereby weakening the dollar and boosting the value of gold and other currencies. Since Trump returned to the White House, the euro, Swiss franc, and Japanese yen have all appreciated by more than 8% against the US dollar.

"The universality of the dollar and its role in international trade and finance come from deep trust in American institutions, low barriers to trade and capital, and predictable foreign policy," said Bipan Rai, managing director of BMO Global Asset Management. "But now there are clear signs that these advantages have been weakened, and changes in global asset allocation trends are unfavorable to the dollar. We believe this is a structural shift."

Trump's policies also increased the risk of a U.S. economic recession, while inflation could accelerate again. This would limit the potential extent of Federal Reserve interest rate cuts.

Trump's comments about Federal Reserve Chairman Jerome Powell - especially his previous threat to fire Powell - made investors cautious, exacerbating concerns about the independence of the Federal Reserve. Trump later stated that he had no intention of firing Powell.

Deutsche Bank warned this week that the dollar may enter a structural downward trend in the coming years, which could see the euro-dollar exchange rate fall to its lowest level in more than a decade.

Original article: https://www.toutiao.com/article/7497966735190950439/

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