The dollar is in decline because of a global ‘loss of faith in U.S. leadership,’ Macquarie says

Finance·The dollar is in decline because of a global ‘loss of faith in U.S. leadership,’ Macquarie saysBy Jim EdwardsBy Jim EdwardsExecutive Editor, Global NewsJim EdwardsExecutive Editor, Global NewsJim Edwards is the executive editor for global news at Fortune

He was previously the editor-in-chief of Insider's news division and the founding editor of Insider UK

His investigative journalism has changed the law in two U.S. federal districts and two states

Supreme Court cited his work on the death penalty in the concurrence to Baze v

Rees, the ruling on whether lethal injection is cruel or unusual

He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.SEE FULL BIO Harold Cunningham via Getty ImagesGold futures hit a record high this morning, over $3,500 per troy ounce, after it was reported that gold exports from Switzerland would face a 39% tariff rate

The U.S.’s rough treatment of its former allies is one explanation for the weakening dollar, according to Macquarie analyst Thierry Wizman

The U.S. dollar rose marginally on the DXY foreign currency index over the last 24 hours, but even then few analysts really believe it will work its way back to where it was at the start of the year

That’s no surprise, as President Trump openly admitted a few days ago that he wants “a weaker dollar.” “Now it doesn’t sound good, but you make a hell of a lot more money with a weaker dollar—not a weak dollar but a weaker dollar—than you do with a strong dollar,” he said on July 25

The rest of the world has taken him at his word. “Perhaps what’s happening with the USD’s weakness in the past few sessions is a renewed loss of faith in U.S. leadership, especially with the slew of super-high tariff rates that have been announced in recent days: 50% on Brazil, 50% on India, 100% on semiconductors, etc

This has certainly caused another round of deep consternation toward the U.S. in foreign capitals (Brasília, and New Delhi, for sure), and perhaps without any benefit of solid political-economic goals being achieved by the U.S. administration,” wrote Thierry Wizman, Global FX & Rates Strategist at Macquarie Group, in a recent note

Wizman believes this will have negative political consequences for the U.S., by driving the BRICS nations further into each others’ arms. “Brazil may simply drift further toward China, as may India, if the tariff issue is not resolved amicably

The spect that the BRICS will have even more willingness to ‘gang up’ on the USD and thereby move the needle away from the use of the USD as a reserve currency, is what may be getting more palpable, in the traders’ views, with each new tariff attack on some emerging ,” he wrote

It may not stop there

Consider the case of Swizterland, which until recently was a neutral country independent of the EU, and an ally of the U.S

Gold is one of Switzerland’s main exports and gold futures hit a record high this morning after the Financial Times reported that its gold exports, previously exempt, would also face the 39% rate

That would be a victory for the EU and an odd outcome for Trump, given that he once said “the European Union was formed in order to screw the United States.” Here’s a snapshot of the action prior to the opening bell in New York: S&P 500 futures were up 0.34% this morning, premarket, after the index closed flat yesterday

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