As Releases Pour in, the US Continues to Baffle

Since the start of Donald Trump’s second term as president, the US economy has been a conundrum few have been able to solve. It seems as if one week the markets slump, barely avoiding a major crash, and the next, they reach record highs.

This has left USD traders, as well as others who participate in the stock and index markets, confounded. There is little regularity among real-world events and market movement, and the relationship between them seems to have almost dissipated, degrading trading and investment into a guessing game.

The volatile nature of the US president’s decision-making isn’t at all helping. A single statement can send markets soaring or cast them into turmoil. There are few reliable ways to indicate what’s coming next.

This article will attempt to present recent and current happenings in the US market to get traders up to speed. Based on this, it may be easier to navigate the tumultuous markets although making long-term forecasts is a difficult task.

The US dollar

In the first half of 2025, the greenback has displayed the biggest loss in over 50 years, since 1973. Measured against a basket of counter-currencies, the dollar fell 11%.

However, this may not be as bleak as it sounds and may be a simple market correction. While dissatisfaction and uncertainty regarding Trump’s tariff policy and overall political decisions are almost certainly driving the loss. It comes after an almost 15-year-long bull run. From 2010 to 2024, the dollar has risen by a total of almost 40%.

Be that as it may, the dollar’s depreciation has a rippling impact on the US economy. Consumers, businesses, investors, and institutions are all hurting from the greenback’s loss in value. The dollar’s loss hurts international transactions in particular, which is especially meaningful with the effect of tariffs compounding.

US Dollar Struggles as EUR and GBP Extend Gains in 2025

Some silver lining came in July, where the US outperformed economic expectations and caused the dollar to regain some ground, gaining around 3.2%. However, in the long term, many economists believe that this is only an introduction to a greater decline.

This is apparent in the forex market. Despite some good news occasionally empowering the greenback, it is performing poorly in most pairs. EUR/USD has risen from the 1.0 range at the start of the year to hovering around the 1.17 range currently. Drops, such as the one that occurred when the US-EU trade deal, universally regarded as negative for the bloc, was transient, and EUR/USD bulls seem to continue breaking through resistance.

A similar story is happening with GBP/USD, which started the year between the 1.22 and 1.23 range and currently hovers around 1.35. While this difference isn’t as pronounced, it’s notable that the UK is having its own economic issues, with rampant inflation and underperforming job reports. The fact that the GBP is still able to significantly outperform the USD in this scenario is alarming for the US.

US labour market

The US labour market has shown its own signs of weakness. Job additions were absent in May and June and slow in July, following a correction from previously more encouraging data in August, another month with only 75,000 jobs added and an increase in unemployment from 4.1% to 4.2%.

Trump has declared that the data is false and rigged to make him look bad, despite a lack of any proof for that claim. The Bureau of Labor Statistics has complained that it’s understaffed even before the firing, and the new situation certainly doesn’t help.

To make matters worse, Trump’s new nominee, economist EJ Antoni has floated an idea of ending the report altogether. He noted that the report was unreliable and that the BLS needs to suspend the data until they are able to procure more accurate measurements.

It’s unclear whether there’s any merit to Antoni’s statement or if it’s just an attempt to buy goodwill from the president by going along with his rhetoric. There seems to be no concrete evidence of the BLS publishing incorrect data, at least without correcting it after the fact.

An end to labour reports could significantly shake investor confidence and make it more difficult to accurately estimate the economic conditions in the United States. Since this is fairly unprecedented, there’s no way to predict what would happen on the markets, but there is some likelihood of panic and uncertainty taking over, which could weigh on the states even further.

Overall economy

Inflation has also been exceeding expectations consistently, with both overall and core numbers concerning economists. This is another area that hits the overall economic health of the US, affecting regular people as well as those involved in financial markets.

Wholesale prices are also starting to show the effects of the US tariff policy, rising 0.9% in July, significantly exceeding the forecasts, which were sitting at around 0.2%. This has caused fears of additional inflation.

However, while the overall economy has reduced its pace, it still continues to grow, expanding 1.2% year-on-year in the first six months of 2025. This is down a whole percentage point from the data prior, but is still exceeding expectations with everything else stalling significantly. Additionally, retail sales have increased in July by 0.5%, and June sales have been revised upwards.

These are both signs of resilience, but perhaps the biggest sign is in the stock market. Due to rate cut expectations, US indices have kept growing to record numbers, relatively constantly growing and hitting intraday highs only last week.

Conclusion

This shows that the world’s strongest economy is down but not out. US investors are eager to jump on any positive news, and this eagerness, although relatively absent in forex markets, is notable in more domestic markets in the United States. However, the following period is bound to have more difficulties. A lot of significant tariffs only went into effect in August, and upcoming economic releases will show their likely adverse market effect. How that translates to the investing world is uncertain, as indices and stocks have shown little reaction, but the USD has weakened significantly. Traders should be careful in their approach to US-based instruments, and those with a risk-off mood may want to veer away entirely.

Disclaimer: This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.