"Investors are selling the dollar in part because of President Trump's attacks on the Fed. If the Fed stops being independent of political meddling, then its credibility as a source of sound monetary policy will become compromised, analysts have repeatedly warned. That will make the dollar a less reliable reserve currency-and it is already leading investors to hedge against U.S. assets, according to Deutsche Bank."
"The dollar has put in such a feeble performance this year that it has begun to hurt foreign investors in U.S. assets. Foreigners own 19% of U.S. equities, according to Deutsche Bank's research. The S&P 500 has grown 12% year to date but any foreigner will have seen more than 10% of that dollar value eaten away over the same time period by the falling value of the greenback."
Global markets are waiting for a 0.25% Federal Reserve interest-rate cut, and the dollar has declined 10.83% on the DXY index year-to-date. President Trump's criticism of the Fed is weakening perceptions of central-bank independence and undermining the dollar's credibility as a reserve currency. The falling dollar has reduced foreign investors' returns on U.S. equities and prompted increased hedging of dollar exposure; foreigners own about 19% of U.S. equities and hedged inflows now dominate unhedged exposure. Rising hedging demand and anticipated rate cuts are contributing to anti-dollar positioning and higher gold prices.
Read at Fortune
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