Bill Campbell, portfolio manager at DoubleLine Capital, said the dollar would fall further and sharply, and the appointment of a new Fed chair willing to cut interest rates quickly could be the catalyst.
Campbell said in an interview, “The dollar may still have a lot of potential to continue falling.” As of September 2024, DoubleLine Capital managed assets worth $95 billion.
The US dollar, which had its worst start to a year on record, rose in July for the first time since 2025. But Campbell stuck to his view that the dollar has entered a multi-year decline as investors are deterred by the US’s huge deficit and diversify their investments to other regions. The Bloomberg Dollar Spot Index fell 0.1% on Tuesday, affected by disappointing US service sector data.
A key obstacle for the US dollar is President Donald Trump’s move to lower borrowing costs. Trump has repeatedly criticized Federal Reserve Chair Jerome Powell, as part of his unprecedented public pressure campaign, which has raised questions about the Fed’s independence.
Trump said he would announce a new Federal Reserve governor in the coming days to replace Adriana Kugler, who announced on Friday that she would step down from the Fed’s board. Kugler’s departure gives Trump the opportunity to appoint a governor who is highly aligned with his preference for low interest rates.
The current governor nominee nominated by the president may take over as chair after Powell’s term expires in May. Trump denies that he plans to fire Powell.
Campbell said that the weakness of the US economy might also put pressure on the dollar. Data released on Tuesday showed that the Institute for Supply Management (ISM) services index in the US dropped last month, falling below all expectations from a Bloomberg survey of economists. Due to weak demand and rising costs, businesses have been laying off workers, and the US service sector was actually at a standstill in July.
The report was released following data published last week, which showed that the labor market was much weaker than previously thought, while the Fed’s preferred price gauge rose in June.
Slower economic growth will make it more difficult for the government to adjust its fiscal trajectory. Campbell has taken advantage of the recent stability of the US dollar to prepare for further weakness, increasing holdings of non-US dollar bonds in both emerging and developed markets. The US dollar index has fallen by more than 7% so far this year.
Campbell said that the greatest threat to his argument is the return of American exceptionalism. If fiscal adjustment and enhanced trade policy certainty can boost the economy and support demand for US assets, then American exceptionalism could become a reality.
The portfolio manager is also closely monitoring the commitments made by trading partners such as the European Union and Japan to invest billions of dollars in the United States, which could offset the impact of other capital outflows. However, the nature and timing details of these investments remain unclear.
“I’m taking a wait-and-see attitude,” he said. “Apart from trade agreements, I think the pace at which global savings flow back to the US will be slower than in the past.”
Technical analysis:
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Gold: Yesterday, the yellow strategy we provided in the plugin to sweep liquidity around 3350 and catch the rebound was perfectly realized with a 5:1 profit-to-loss ratio. For today, continue to pay attention to buying after a pullback following a break above the momentum. Additionally, keep an eye on the 0.618 retracement level of the overnight rally for potential low buys. For detailed positions, please consult the plugin.
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Nasdaq: Yesterday, both our article and the plugin reminded you to catch the short signal of the price, especially to pay attention to the pullback sell after the break. As a result, the blue plugin’s alert area completed a perfect pullback confirmation after breaking below 23,065, and further decline achieved a profit-to-loss ratio of more than 2 times. Today, we continue to focus on the price’s downward oscillation or the short signal after the oscillation. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Continue to adhere to the strategy of waiting for a breakthrough signal in momentum before catching the rebound signal. Pay close attention to the price performance after breaking through the 66-66.30 range within the day. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
17:00 Eurozone June retail sales
22:30 U.S. EIA Crude Oil Inventories Change (thousands of barrels) (to 0801)
At 03:10, Mary Daly, the president of the Federal Reserve Bank of San Francisco, will deliver a speech.
