Change is the law of life. And those who look only to the past or the present are certain to miss the future.
John F. Kennedy, 1917 - 1963
35th President of the United States
News & Insights
2025 Q2 Commentary - The Fading Smile
04 August 2025, Shaun Le Messurier
The Fading Smile
Our Q2 2025 commentary examines the shifting fortunes of the US dollar and it's implications for global investors.
This edition explores the historical resilience of the dollar, the evolving sentiment among discretionary fund managers and the potential need for new portfolio strategies in a changing macroeconomic landscape.
Key Takeaways:
- Historical Context: The US dollar has long benefited from the so-called "dollar smile," performing well in both risk-on and risk-off environments. Recent developments suggest this dynamic may be breaking down.
- Market Sentiment: A sharp swing in sentiment, driven by fiscal concerns, policy uncertainty and geographic tensions, has cast doubt on the dollar's safe-haven status.
- Investment Insight: With traditional diversifiers like bonds and the dollar under pressure, DFMs may need to embrace more complex strategies, including volatility-linked instruments, to manage drawdowns and protect client portfolios.
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