Is This Why The Dollar Is Tanking?

Some nasty polling data out of Gallup about American global leadership that may explain, in part,  the dollar’s weakness, which is surprising to many given the strong economic data and ebullient equity markets.

We thus suspect the weak Dixie is more than just that the economic data and markets around the world are relatively stronger and more ebullient than in the United States (see our post, Making The World Great Again).

We have written over the past year about the “Trump Slump” in the dollar.  That is, the dollar has tended to move down with the president’s poll numbers (see here).

Now this from Gallup (which is more concerning given China’s reduction of Treasury holdings),   World’s Approval of U.S. Leadership Drops to New Low,

WASHINGTON, D.C. — One year into Donald Trump’s presidency, the image of U.S. leadership is weaker worldwide than it was under his two predecessors. Median approval of U.S. leadership across 134 countries and areas stands at a new low of 30%, according to a new Gallup report.

The most recent approval rating, based on Gallup World Poll surveys conducted between March and November last year, is down 18 percentage points from the 48% approval rating in the last year of President Barack Obama’s administration, and is four points lower than the previous low of 34% in the last year of President George W. Bush’s administration.  – Gallup

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Big Losses Are Among Close Allies, Few Gains

…The relatively fragile image of U.S. leadership in 2017 reflects large and widespread losses in approval and relatively few gains. Out of 134 countries, U.S. leadership approval ratings declined substantially — by 10 percentage points or more — in 65 countries that include many longtime U.S. allies and partners.

Portugal, Belgium, Norway and Canada led the declines worldwide, with approval ratings of U.S. leadership dropping 40 points or more in each country. While majorities in each of these countries approved of U.S. leadership in 2016, majorities disapproved in 2017. – Gallup

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…in contrast, U.S. leadership approval increased 10 points or more in just four countries: Liberia (+17), Macedonia (+15), Israel (+14), and Belarus (+11). The 67% of Israelis who approve of U.S. leadership is on par with the ratings Israelis gave the U.S. during the Bush administration. Notably, interviewing in Israel took place before Trump officially recognized Jerusalem as Israel’s capital, but he had repeatedly promised to do so during his campaign for president.  — Gallup

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U.S. Approval Drops to New Lows in Americas

Regionally, the image of U.S. leadership suffered most in the Americas, where approval ratings dropped to a new low. The median of 24% who approve of U.S. leadership in the region now stands at about half of what it was in the last year of the Obama administration (49%).

Approval of U.S. leadership plunged in every country in the region in 2017. In fact, there were double-digit decreases in all countries except Venezuela, where approval dropped nine points.

U.S. leadership approval ratings suffered nearly as much in Europe as they did in the Americas; however, the current 25% approval rating there is not the lowest on record — the ratings during the last two years of George W. Bush’s administration still hold that distinction. In Asia, approval dropped to 30%, tying the previous low that Gallup measured during the Bush administration.

Africa as a whole remained the bright spot for U.S. leadership approval, as it has been for the past decade. Nonetheless, the approval rating for the region is at its lowest level yet, clinging to a bare majority (51%) that may be at risk after the president’s alleged remarks about the continent last week. — Gallup

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Trump’s First Year: Hard Times for U.S. Soft Power

The losses in U.S. leadership approval may have implications on U.S. influence abroad. With its stable approval rating of 41%, Germany has replaced the U.S. as the top-rated global power in the world. The U.S. is now on nearly even footing with China (31%) and barely more popular than Russia (27%) — two countries that Trump sees as rivals seeking to “challenge American influence, values and wealth.”– Gallup

Double yikes!!    Interest rates rising, dollar weakening.  This would matter in less irrationally exuberant markets.   It won’t until it will.