{"id":322359,"date":"2026-01-30T08:30:56","date_gmt":"2026-01-30T08:30:56","guid":{"rendered":"https:\/\/www.thetruthseeker.co.uk\/?p=322359"},"modified":"2026-01-31T06:05:53","modified_gmt":"2026-01-31T06:05:53","slug":"the-dollar-could-have-further-to-fall-as-its-decline-creates-a-double-edged-sword-for-america","status":"publish","type":"post","link":"https:\/\/www.thetruthseeker.co.uk\/?p=322359","title":{"rendered":"The dollar could have further to fall as its decline creates a &#8216;double-edged sword&#8217; for America"},"content":{"rendered":"<h1 style=\"text-align: center;\"><strong>Chloe Taylor \u2013 CNBC.com Jan 28, 2026<\/strong><\/h1>\n<ul>\n<li>The U.S. dollar fell on Tuesday after President Donald Trump insisted the currency \u2014 which declined notably last year \u2014 is doing \u201cgreat.\u201d<\/li>\n<li>Nela Richardson, ADP\u2019s chief economist, told CNBC the decline of the dollar is a \u201cdouble-edged sword\u201d and a \u201csign of the fraying\u201d of the economic picture.<\/li>\n<li>Other market watchers told CNBC the dollar is in bear market territory, and is likely to fall further.<\/li>\n<\/ul>\n<p>The dollar is in a bear market, market watchers said on Wednesday, as one warned the weaker greenback is a \u201cdouble-edged sword\u201d for the U.S. economy.<\/p>\n<p><a href=\"https:\/\/www.cnbc.com\/2026\/01\/27\/dollar-worst-one-day-rout-since-april-trump-says-hasnt-fallen-too-low.html\">Tuesday<\/a> saw the dollar suffer its worst one-day slide since April \u2014 when Trump\u2019s so-called \u201cliberation day\u201d announcements sparked what became known as the <a href=\"https:\/\/www.cnbc.com\/2025\/04\/15\/navigating-the-sell-america-trade-as-tariff-turmoil-persist.html\">sell America<\/a> trade. The decline came after the president told reporters in Iowa he believes the dollar is \u201cdoing great.\u201d<\/p>\n<p>The <a href=\"https:\/\/www.cnbc.com\/quotes\/.DXY\/\">U.S. dollar index<\/a>, which measures the greenback against a basket of major rivals, has shed 2.2% so far this year, after falling more than 9% in 2025.<\/p>\n<p>Trump has long touted the benefits of a devalued U.S. dollar in relation to international trade, and openly <a href=\"https:\/\/www.cnbc.com\/2025\/06\/04\/swiss-franc-why-a-strong-currency-is-causing-problems-for-switzerland.html\">lambasted<\/a> countries that intervene in foreign exchange markets to lower the value of their own currencies against the greenback.<\/p>\n<p>\u201cIt doesn\u2019t sound good, but you make a hell of a lot more money with a weaker dollar&#8230; than you do with a strong dollar,\u201d he <a href=\"https:\/\/www.cnbc.com\/2026\/01\/28\/it%20doesn't%20sound%20good,%20but%20you%20make%20a%20hell%20of%20a%20lot%20more%20money%20with%20a%20weaker%20dollar%20-%20not%20a%20weak%20dollar%20but%20a%20weaker%20dollar%20-%20than%20you%20do%20with%20a%20s%20\">said<\/a> in July, adding that the ideal scenario is not an extremely weak dollar, but a moderately weaker one. A strong dollar dampens tourism and means U.S. suppliers \u201ccan\u2019t sell anything,\u201d he said.<\/p>\n<p>A weak dollar can provide a boost to the domestic economy \u2014 for example, by making U.S. goods more attractive to overseas buyers and boosting exports, or bolstering the value of American firms\u2019 foreign earnings when they are converted back to USD.<\/p>\n<p>Despite Trump\u2019s insistence that the decline of the dollar is \u201cgreat\u201d news for the U.S., there are also negatives attached to a weaker currency \u2014 like pricier imports, or a loss of confidence from investors.<\/p>\n<h2 style=\"text-align: center;\"><strong>\u2018Double-edged sword\u2019<\/strong><\/h2>\n<p>Speaking to CNBC\u2019s \u201cSquawk Box Europe\u201d on Wednesday, Nela Richardson, ADP\u2019s chief economist, dubbed the decline of the dollar a \u201cdouble-edged sword.\u201d<\/p>\n<p>\u2033[It] does make U.S. exports more competitive abroad, but a weak dollar at home doesn\u2019t always have the confidence of markets,\u201d she said. \u201cAnd that confidence is going to be very important as we look at other things that are a struggle for the U.S. economy, like sticky inflation, like high deficits and debts, and the need to sell treasuries, both domestically and abroad.\u201d<\/p>\n<p>Richardson argued that the decline of the dollar meant the \u201cpuzzle of the U.S. economy\u201d had become increasingly complex.<\/p>\n<p>\u201cThe headline numbers don\u2019t tell the whole story, and that dollar weakness is a sign of the fraying of that story even though the headline numbers objectively are strong,\u201d she said, referring to data points like the unemployment rate and economic growth.<\/p>\n<p>\u201cIf you knew nothing about the last year, but just saw the headline numbers \u2026 you would capture a very strong U.S. economy that would suggest a stronger dollar and an interest rate policy that was not going lower, but that is not where we find ourselves today,\u201d she said.<\/p>\n<h2 style=\"text-align: center;\"><strong>K-shaped economy<\/strong><\/h2>\n<p>Asked whether consumer confidence \u2014 which <a href=\"https:\/\/www.cnbc.com\/video\/2026\/01\/27\/january-consumer-confidence-comes-in-at-84-point-5-in-weakest-number-since-2014.html\">fell<\/a> to its lowest in more than a decade this month \u2014 played into this picture, Richardson said the reason markets were concerned about the figure when other areas of the economy appeared strong was \u201ca letter: it\u2019s \u2018K.\u2019\u201d<\/p>\n<p>\u201cIt\u2019s a <a href=\"https:\/\/www.cnbc.com\/2025\/11\/05\/consumer-debt-rises-amid-worsening-k-shaped-economic-divide.html\">K-shaped<\/a> consumer spending pattern where the top 20% of income earners are driving most of the spending in the United States, and the lower quartile of consumers are struggling over the higher pace of inflation,\u201d she told CNBC. \u201cThe numbers look good, but underneath the surface is where all the action is.\u201d<\/p>\n<p>This was also evident in the labor market, Richardson added.<\/p>\n<p>\u2033[It\u2019s] reflecting that K-shaped consumer where we\u2019re seeing hiring in health care services, which are expensive services in the United States for most consumers, and leisure and hospitality, which is a discretionary service for all consumers,\u201d she explained. \u201cSo, if you are well heeled, this economy is great for you. If you are not, it\u2019s a struggle.\u201d<\/p>\n<h2 style=\"text-align: center;\"><strong>\u2018Dollar bear market\u2019<\/strong><\/h2>\n<p>Cole Smead, CEO and portfolio manager at Smead Capital Management, told CNBC\u2019s \u201cSquawk Box Europe\u201d on Wednesday that he expects the dollar sell-off has further to run.<\/p>\n<p>\u201cWe\u2019re in a dollar bear market longer term,\u201d he said. \u201cI say that because if you go back and look at these \u2018American manias\u2019 [in markets], if you go back and look at the telecom bubble and tech bubble the late 1990s, the dollar peaked in 2002 and within six years, you saw the dollar go to a low it hadn\u2019t seen for [a] very, very long time.\u201d<\/p>\n<p>From its 2002 peak to its 2008 low, the U.S. dollar index nosedived by around 41%.<\/p>\n<p>\u201cThat only took six years,\u201d Smead said. \u201cI point that out because that was \u201902 to \u201908 and the U.S. stock market peaked in 2000 so, ending these manias, it\u2019s a capital flow problem.\u201d<\/p>\n<p>A huge amount of capital has flowed into the U.S. over the past decade, with the AI boom luring fresh bouts of capital into American markets. Smead noted that 70% of the MSCI World Index is currently comprised of U.S. stocks.<\/p>\n<p>\u201cAnd so as money will flow eventually [to] other places, as [investors] seek out better returns, we\u2019re going to see the dollar struggle because of that capital account movement abroad,\u201d Smead added.<\/p>\n<p>In a note on Wednesday, TS Lombard\u2019s Daniel Von Ahlen agreed that the dollar was poised to move lower, despite its recent sell-off coming as a surprise.<\/p>\n<p>\u201cStrong global risk sentiment, surging commodity prices, <a href=\"https:\/\/www.cnbc.com\/2026\/01\/27\/market-thinks-blackrocks-rieder-will-next-chair-the-fed-whats-at-stake.html\">rising odds for Rick Rieder<\/a> as the next Fed chair and Trump\u2019s recent row with Europe over Greenland all torpedo what was otherwise looking to be a resilient Q1 for the greenback,\u201d he said. \u201cThe \u2018sell America\u2019 trade is back.\u201d<\/p>\n<p>He added that revised U.S. GDP forecasts, coupled with \u201cTrump\u2019s <a href=\"https:\/\/www.cnbc.com\/2026\/01\/22\/trump-tariffs-greenland-europe-deal-taco-trade-sell-america.html\">repeated TACOing<\/a>,\u201d had supported dollar resilience in the latter half of 2025.<\/p>\n<p>\u201cStrong growth in the U.S. this year is now consensus. Ordinarily, there should be more scope for other [developed markets] growth forecasts to catch up, which reinforces the dollar bear case,\u201d Von Ahlen said. \u201cAt the same time, the dollar is still trading at a rich premium on most valuation metrics, leaving it vulnerable to further declines.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/www.cnbc.com\/2026\/01\/28\/us-dollar-usd-greenback-dxy-sell-america-bear-market-bubble.html\">Source\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tuesday saw the dollar suffer its worst one-day slide since April 2025. Trump however is in denial, says the dollar is doing \u201cgreat\u201d<\/p>\n","protected":false},"author":39262,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[61,66],"tags":[],"class_list":["post-322359","post","type-post","status-publish","format-standard","hentry","category-Commentary","category-Economics"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/322359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/users\/39262"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=322359"}],"version-history":[{"count":1,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/322359\/revisions"}],"predecessor-version":[{"id":322360,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/322359\/revisions\/322360"}],"wp:attachment":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=322359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=322359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=322359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}