Dollar Suffers Worst Year Since 2003 (And The Future Looks Even Grimmer)

Tyler Durden's picture

The US Dollar is down over 9% year-to-date against a broad basket of the world's fiat currencies, tumbled over 10% against gold, and has collapsed against Bitcoin; but, as Bloomberg's Garfield Reynolds warns, the dollar's worst year since 2003 is about to get "even grimmer" in 2018...

Via Bloomberg,

The one point of clarity coming out of Washington is that tax reform isn’t about to save the dollar where Fed rate hikes have failed.


CFTC data showed dollar shorts increased again in the second half of November after shrinking to the smallest level since June. That snapped a move that had suggested investors were about to go net dollar-long.

The dollar’s surge at the end of 2016 was built around accelerating U.S. growth and belief that the Fed would lead the developed world in tightening policy.

U.S. growth is still strong, and the Fed is still tightening, but the rest of the world is catching up and there’s doubt the U.S. can cope with significant dollar gains.

Tax reform was flagged as the next fuel for the rally, but that looks unlikely.

Backers of the plan say cutting corporate tax rates will fire up the economy, but the Fed and the IMF haven’t changed long-term forecasts for U.S. GDP even as the odds grow that some sort of reform will pass.


Monday’s news that Republican senators kept the alternative minimum tax for companies highlights how the partisan rush to pass the bill increased the odds of a flawed package.


It’s also illuminating to consider that the retreat in tech stocks is being attributed to speculation those firms will benefit least from the tax changes -- because existing breaks designed to encourage innovation arguably did just that.


Turning that around, it implies that those sectors that will benefit most are some of the U.S.’s least dynamic. That undermines the arguments for stronger growth.

The flattening of the Treasuries curve -- with benchmark 10-year yields totally range-bound -- is another vote of no-confidence.

That helps explain what is a very broad-based retreat: USD is in the red in 2017 against almost two-thirds of the 110+ global currencies that aren’t constrained by a peg.

Expect to see fresh breakouts for EUR and JPY, as the respective central banks are forced to cut stimulus thanks to burgeoning growth in Europe and policy exhaustion in Japan.

Traditional high-yield plays such as KRW, AUD, NZD, BRL will have a bias to climb (TRY and ZAR could join that list if politics takes a back seat) amid a positive global growth backdrop.

This time twelve months ago, markets were gearing up for the ’Year of the Dollar.’ That turned out badly, but the year ahead could be even bleaker now that its fans have abandoned it.

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Francis Marx's picture

So another wards, the dollar is going to rally.

Gap Admirer's picture

Doom porn Tuesday.

We're all gonna die.

Paul Kersey's picture

Just as foreigners are buying less U.S.real estate, the dollar starts tanking, making U.S. real estate cheaper to foreigners. If the dollar continues to lose value against foreign currencies, foreign buyers should begin buying again.

bobcatz's picture

Dollar suffers???

The US$ is already DEAD.

yogibear's picture

The intrinsic value of fiat is zero.

MonetaryApostate's picture

Good thing we got Zero Hedge...

I mean where else we gonna trade time for Zero?

Bobbyrib's picture

Not with a Neo-Con in charge..

hedgeless_horseman's picture


And in similiar news, just moments ago, $11,897 is a new ATH for BTC, bitchezzz!!!


Fuck you, Jerome!!!




Bay of Pigs's picture

Love you HH, but this shit is beyond stupidity.

Cash some in bro. Count yourself lucky.

hedgeless_horseman's picture


Love you too, Bay!!!


Yes.  No question.


Thanks for the financial consulting, but I think I have it covered.  

Bay of Pigs's picture

Just an oberservation.

Cheers and Aloha!

Consuelo's picture



Gonna get very interesting soon me thinks.

J bones's picture

Especially when Bitcoin Market Cap is larger than 15 of the 30 companies that make up the Dow.

buyingsterling's picture

All of their value is based no faith too! Fiat production.

Bill of Rights's picture

Yawn...yet were all investing to make those worthless pieces of paper..Othwewise enjoy that blue tarp city.


Been reading this shit my whole life and hear I sit.

VIS MAIOR's picture

But later will that fall more deep an painfull for us )))))

XBroker1's picture

Fear is good for the economy.

Arnold's picture

Fear is good for churn.

razorthin's picture

It seems everyone has capitulated on gold and silver.  They were featured in at least a half-dozen articles a day, and these days - narry a whisper.

What do you suppose that means?

GRDguy's picture

It means those financial sociopaths that lie and steal from most everyone are the only ones winning.

T-NUTZ's picture

it means sometimes after the bear disembowels you, it then feasts on your internal organs as you bleed to death watching.

HRClinton's picture

Everyone who has capitulated on PM has done so with old money.

This is the perfect time for us BTC HODLers to buy with new money: OPM.


Bay of Pigs's picture

No. You think that but it isn't so.

Keep pushing the false narrative though.

Son of Captain Nemo's picture

What happens when the $$$ suffers it's "worst year since 2003" (!

If you haven't figured it out yet... North Korea isn't the target and doesn't have what the U.S. Government needs to make it's next debt collection payment to the BIS!!!

Mini-Me's picture

Do you mean that the green paper in my wallet isn't worth anything?  Who knew?

I am Groot's picture

That big roll of two ply in your latrine is worth more .

Juggernaut x2's picture

Then go buy some food or a tank of gas with it

Common_Cents22's picture

what can really replace the dollar in a significant way?  as bad as the US is,  any other country/currency of size is worse.    I suppose the globalist end game is to knock the dollar back several notches and bring in a global currency (SDR).

Withdrawn Sanction's picture

Ive been hearing this claptrap about the IMF's SDR for years, and it's still doesn't pass the giggle test.  The SDR is nothing more than a special purpose currency whose value is dervied from a basket of (deplorables) currencies based on their relative contributions to the IMF bailout/management facilities.  SDRs outstanding currently total less than $300billion.  A lot of money to you and I, yes, but chump change when one considers the trillions of dollars of transactions that cross international borders (not to mention change hands internally) every DAY.  It's like asking a Toyota Corolla to pull a tractor trailer load of lead.  Good luck w/that.  

Your first 2 sentences are spot on, however. 

it's true the dollar has had a bad year, as the chart porn in the article demonstrates; however, this article also sounds a lot like someone talking the opposite side of their book.  FWIW, the euro looks much more problematic for the coming year (bad banks, bad immigration/labor policies, and a hopeless taxation structure to name but a few of its more urgent problems).  

The takeaway line (which they even underlined for us) This time twelve months ago, markets were gearing up for the ’Year of the Dollar.’ That turned out badly, but the year ahead could be even bleaker now that its fans have abandoned it.  

When everyone is bearish, you should be....?  (Hint, if everyone has truly abandoned it, it means there are few sellers left...)

Common_Cents22's picture

yep, in the world of finance and markets, its all relative.   Looking at the US in a vacuum is vacuous.   

Internet-is-Beast's picture

The euro is strong due to immigration. All those immigrants bringing their talents, skills, and a high level of education can only breath life into the European economy. It is they who will now begin paying for the boomers retirements. Thank you Frau Merkel!

I am Groot's picture

My new currency of choice are platinum hollow points filled with millennial tears.

Pearson365's picture

The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion — policemen, customs guards, penal courts, prisons, in some countries even executioners — had to be put into action in order to destroy the gold standard. Solemn pledges were broken, retroactive laws were promulgated, provisions of constitutions and bills of rights were openly defied. And hosts of servile writers praised what the governments had done and hailed the dawn of the fiat-money millennium. – Ludwig von Mises

Withdrawn Sanction's picture

...and now we reap the whirlwind

buzzsaw99's picture

sorry but that treasury curve - bloomturd usd index correlation is and always was crap.  i expect the usd to make gains against the yuan, yen, eur, and gold in 2018 no matter what happens with usa tax reform.  i could be wrong because markets are rigged by central banks and speculation, but since that's what we're talking about there it is.

Bobbyrib's picture

Wish in one hand, shit in the other..

steve2241's picture

How have the "Fed rate hikes" failed?  Realistically, there haven't been any!

Let it Go's picture

When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current global economy that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat. I contend they are keeping the dollar from moving higher.

Like many Americans, I have railed against our growing debt and questioned whether it would destroy the dollar, however, when looking at the miserable alternative currencies before us the dollar is without a doubt king. We must not underestimate the advantage the dollar has being the world's reserve currency or the size of debt floating across the globe comprised in dollar based agreements.

TeddyBear's picture

Trumponomics is less Mexicans buying dollars and mailing them home.

Wouldn't this also mean that GDP growth is less than they tell us.


TeethVillage88s's picture

All by Design.

This is all planned, part of planned inflation, planned money (USD) Deflation, and Bank Debt 50:1 Leverage as per Jim Rickards (2009-2015 created $60 Trillion).

God Damned Peasants. Wake the Fuck up.

Mustahattu's picture

It'll be a long winding down of the petrodollar and the US will be kicking and screaming till the reset.

onmail1's picture

With first nuke strike on USA

Dollar will be forgotton

Hongcha's picture

Is gold up $.57 yet?  Or still careening to a new 52-week low?

Edit: Up $.20 as of 23:12 EDT.


The Real Tony's picture

The teeter point has always been at exactly $1,234.00. 

DaiRR's picture

Smell the tulips.  Inflation is an awesome fertilizer.

G-R-U-N-T's picture

Sorry, but you'll be crying and begging for inflation once the dollar doubles!

bjax's picture

The coming years are bad for FIAT .. end of story. All FIAT currencies collapse in the end. Normally sooner rather than later.

ludwigvmises's picture

The Dollar will implode. The EUR will surprise to the upside.