Capital outflows starting to normalize after 'highly unusual' first half, says Exante Data's Nordvig

Market Trends & Capital Flows - A significant asset allocation shift away from the US dollar in international portfolios was observed, particularly into European equities, leading to their outperformance [2] - This asset allocation shift was most aggressive from March to June, with Asia following later, peaking in June [3][6] - The US dollar has stabilized in the last six weeks [7] Monetary Policy & Economic Factors - The Federal Reserve's actions will define the next move for the US dollar [3] - The Fed faces a tricky balancing act between unemployment and inflation [4] - The market is closely watching the labor market to determine if the Fed will cut rates [7] - A hawkish rate cut is expected in September, but the Fed is unlikely to commit to a multi-cut path due to inflation concerns [9] - Tariffs are expected to increase again by October, potentially impacting inflation [8] US Dollar & Government Influence - The US Treasury Secretary has expressed a desire for a weaker US dollar [10] - The US influence on the dollar is primarily through verbal interventions rather than direct control like China [11][12] - The cyclical state of the US relative to the rest of the world will ultimately determine the dollar's value [12] - The tariff push is expected to be paid for mostly by consumers, potentially leading to a decrease in consumption towards the end of the year [13]