The US dollar index is being pressured lower and lower as investors lose faith in the US economy as a stable, predictable investment environment. The current policies are not pro-growth. Tariffs are a tax that will drain economic growth prospects as consumers are pushed to pay hefty taxes to consume otherwise inexpensive goods.
Because of the tariffs and their negative effects on economic growth, along with the increase in expenditures by the federal government via the next budget and tax cut extensions, the world is doubting the viability of the United States. This creates a negative feedback loop, which will perpetuate the lack of confidence and the decline in economic growth.
You will want to watch the US dollar index. If it snaps from this level, drops further, US Treasuries will dump, and this will push yields higher, which will trigger the next stock market decline lower. The US dollar index is sitting at a proverbial line-in-the-sand, and it is the most important thing to watch right now.
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