The U.S. dollar is slumping on Aug. 20 as U.S. President Donald Trump steps up his attacks on the U.S. Federal Reserve, calling into question its independence.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 55% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The greenback, as the American currency is known, is down half a percentage point after President Trump called on social media for Federal Reserve Governor Lisa Cook to resign from the central bank. The U.S. dollar has now declined 10% this year versus a basket of other foreign currencies, its worst slump in more than 50 years. The euro currency has gained 13% against the dollar this year.
Analysts say the decline in the dollar is due largely to a loss of confidence in American policies and the country’s fiscal health. Much of the concern relates to a potential loss of independence at the U.S. Federal Reserve, with President Trump threatening to fire Fed Chair Jerome Powell and install a political loyalist. The president has repeatedly called for the Fed to cut rates to stimulate the economy and stock market.
Further to Fall?
Abrupt changes to tariff policies, signs of a slowing economy, and geopolitical instability are also weighing on the U.S. dollar, say analysts. Many investors continue to flee to the safe haven of gold, which has seen its price rise more than 30% in the last 12 months.
Some analysts say they expect the value of the U.S. dollar to weaken further in coming months as investors shift capital to Europe, cryptocurrencies such as Bitcoin (BTC), and assets such as gold. A reduction in interest rates by the Federal Reserve is also expected to send the dollar lower, with some Wall Street firms forecasting a 10% decline if the central bank cuts rates aggressively in coming months.
Markets are currently pricing in a 25-basis-point rate cut from the Fed at its next meeting on Sept. 17, which would take the Federal Funds Rate down to a range of 4% to 4.25%.
Is the SPDR S&P 500 ETF Trust a Buy?
The SPDR S&P 500 exchange-traded fund (SPY) currently has a consensus Moderate Buy rating among 504 Wall Street analysts. That rating is based on 425 Buy, 73 Hold, and six Sell recommendations issued in the last three months. The average SPY price target of $718.24 implies 13.47% upside from current levels.
Read more analyst ratings on the SPY ETF
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.