• The US dollar index fell to a new 39-month low of 97.78 early Thursday morning, down 0.85 from Wednesday's settlement.
• Most of the early morning headlines talked of global de-dollarization, pre-dominantly in Asia.
• This had been squawked about over the last number of years from global adversaries, but in the end all it took was US policies to spark selling from around the world. 

As I usually do, the first thing I looked at this morning was the US dollar index ($DXY). Early Thursday shows the greenback had fallen to an overnight low of 97.78, down 0.85 from Wednesday’s settlement and its weakest level since March 2022. It's interesting to note this long-term downtrend began with a bearish spike reversal, technically speaking, this past January. Given most of what happens isn't by coincidence, it certainly brings to mind the most recent US inauguration. 

I still find it interesting how the US has been able to de-dollarize the rest of the world rather than having its global adversaries do it, as the fear mongers told us twas going to happen he past number of years. This is troubling on a number of fronts:

• The US dollar continues to weaken despite indications by the Fed fund futures forward curve the FOMC won’t be cutting rates again any time soon.
• The weaker the US dollar, the stronger inflation  will likely be. This is the usual consequence of tariffs and trade wars. End of story.
• Speaking of which, the endless, senseless, trade problems the US has created has led to the dollar not being the global safe-haven currency.

There is little to no faith in the US as a global leader from central banks around the world. Hence the continued selling of the US dollar and US long-term bonds while central banks load up on gold, silver, and other global currencies. 

Following my early morning mid-month look at the long-term monthly chart for the US dollar index, I did a headline search to see what might be driving the greenback lower. (Yes, I realize this is backward from the way it should be done. To my previous editors in the newsroom, I apologize.) It seems I was on the right track when I used the seemingly made-up word “de-dollarization”, because that is the term that kept coming up. The rest of the world, Asia in particular, is selling the US dollar for a number of reasons. It doesn’t take much imagination to come up with the most popular one, “(The US president’s) erratic trade policy decisions…are probably encouraging a more rapid shift towards other currencies, “one foreign exchange strategist was quoted as saying^[i]. If the dollar is weakening, then the flip side of the coin is inflation is strengthening. Tariffs and trade wars will do that. On a domestic note, speaking of inflation, boxed beef continues to skyrocket with choice adding another $3.00 Wednesday afternoon while select was up $0.91. This type of vertical rally won’t last forever, usually ending in a volatile crash. We’ll see what happens this time.  

Will the weakening US dollar brighten the outlook for US exports? As I talked about recently, demand for US grains has actually been slowing since the US presidential election last November.  As we move deeper into Q4 of the 2024-2025 marketing year for US corn and soybeans, and Q1 of 2025-2026 for the wheat sub-sector, it will be interesting to see if the trend of export shipments pace projections change. For the record, the most recent weekly update, for the week ending Thursday, June 5, put pace projections at: 

• Corn = 2.6 bb, down 420 mb from the pace projection the first week of November 2024. This is still 22% above 2023-2024 when the US reportedly shipped 2.14 bb. 

• Soybeans = 1.82 bb, down 130 mb from the pace projection the last week of October 2024. This is still 11% above 2023-2025 when the US reportedly shipped 1.64 bb. 

^[i] From this CNBC piece: (LINK)