The falling U.S. dollar continues to be the most important driver of multi-asset investing in 2025.
The first half of 2025 saw the U.S. Dollar Index (DXY) fall over 10%, experiencing one of the worst first-half performances in the past 50 years (see chart below). Although a falling dollar may sound ominous, it has helped lift risk assets more broadly. International Equities (represented by the MSCI ACWI ex US) returned +19% for the first half of 2025 – one of the strongest 6-month returns in recent memory. Almost half of this return was generated from a falling U.S. Dollar1. Given the current economic outlook for the U.S. of slower growth, rising federal debt, and continuous trade deficits, this should put downward pressure on the exchange rate, further supporting international equities.
Source: Bloomberg, FactSet, J.P. Morgan Asset Management; (Left) ICE; (Top right) BEA; (Bottom right) BIS. Currencies in the DXY Index are: British pound, Canadian dollar, euro, Japanese yen, Swedish krona and Swiss franc. *Interest rate differential is the difference between the 10-year U.S. Treasury yield and a basket of the 10-year yields of each major trading partner (Australia, Canada, eurozone, Japan, Sweden, Switzerland and UK). Weights in the basket are calculated using the 10-year average of total government bonds outstanding in each region. Guide to the Markets – U.S. Data are as of June 30, 2025.
As we look ahead to the second half of the year, the biggest question is: can the U.S. dollar continue falling at this pace? Experience teaches us that long-term investors shouldn’t attempt short-term trades. Those who sold equities in April missed the subsequent 25% rally in the S&P 500 from the bottom. The same principle applies to currencies—despite the downward trend in the U.S. dollar so far this year, that trend could easily reverse.
Source: FactSet.
To receive our market updates, please visit www.sdwealthmanagement.com and subscribe to our emails.
About Schneider Downs Wealth Management
Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
Sources:
- Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. 15-years ann. is a rolling 15-year period ending with the previous month-end. All return values are MSCI Gross Index data, except the U.S., which is the S&P 500. *Multiple expansion is based on the forward P/E ratio, and EPS growth outlook is based on NTMA earnings estimates. Chart is for illustrative purposes only. Past performance is not indicative of future results. Guide to the Markets – U.S. Data are as of June 30, 2025.
