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The Downfall Of The Dollar
Danny Riley
September 02, 2025
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Our View
Five Reasons the ES and NQ Sold Off
Dell (DELL) -8.0% and Marvell Technology (MRVL) -18%, Caterpillar (CAT) fell 3.6%.
August MNI Chicago PMI and the University of Michigan's US August Consumer Sentiment Index fell.
@HandelStats "Up Thursday / Down Friday" Rule.
Week 5 Friday Options Expiration.
End-of-the-month rebalance.
The ES rallied up to 6518.00 on Globex, trading 6499.00 on the 9:30 regular session open. It traded up to 6602.75 and then sold off 43 points down to 6460.25 at 10:15. It rallied to 6475.50 at 10:35, sold off down to the low of the day at 6555.50, rallied up to 6472.00 at 11:06, and then traded in the 6458.50 to 6474.50 range for the next 4 hours.
The ES rallied up to 6476.00, traded 6479.25, fell a few points before the 3:50 imbalance showed $1.5 billion to sell, traded 6462.25 at 3:55, then rallied up to 6479.25 and traded 6475.25 on the 4:00 cash close. It traded 6472.75 on the 5:00 futures close, down 44.75 points or -0.69% on the day. The NQ settled at 23,461.75, down 307.25 points or -1.29%.
In the end, the ES and NQ were weighed down by weakness in technology stocks and economic reports. In terms of overall tone, it was all about the failed rallies. Volume was higher, with 1.275 million contracts traded.
On Sunday night, the ES opened at 6478.75, up 3.75 points, made a low at 6459.50, and settled at 6479.75, up 7 points or +0.11% on volume of 118k lots.
This week includes 15 economic reports, four Fed speakers, and the Senate Banking nomination hearing for Stephen Miran to be Fed Governor. The 2Q 2025 earnings season is 98% complete.
Dollar Demise
The most important currency in the world is under attack—the US dollar. I don’t think Trump helped its cause when he placed a 50% tariff on India. The U.S. and India have had an evolving, often strained relationship since India’s independence in 1947, following the end of British rule. Relations have moved from periods of estrangement during the Cold War to a strong strategic partnership in the 21st century, especially after India was named a major defense partner in 2016 and a civilian nuclear deal in 2008.
Additionally, India has been a major holdout in the expansion of BRICS, the new currency bloc designed to counter the U.S. dollar. Original BRICS members were Brazil, Russia, India, China, and South Africa. Nine additional countries were recently announced as partners: Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Thailand, Uganda, Uzbekistan, and Nigeria.
While China and Russia continue to push the initiative, India has advocated a more cautious and structured approach, primarily due to strategic competition with China. While India ultimately supported the expansion, it did so with specific motivations and concerns, including ongoing border disputes, strong opposition to the Belt and Road Initiative (BRI), and resistance to turning BRICS into an explicitly anti-Western currency.
Over the weekend, Chinese President Xi Jinping reiterated his vision for a new global economic and security order that prioritizes the "Global South." In a direct challenge to the United States during a summit that included Russia and India, Xi said:
“We must continue to take a clear stand against hegemonism and power politics, and practice true multilateralism.”
This was a thinly veiled swipe at the United States and Trump’s tariff policies. Xi also called for the creation of a new SCO development bank, which would mark a major step in the bloc’s long-held aspiration of developing an alternative payment system to circumvent the U.S. dollar and its global sanction power.
At a point when US and India relations were at their highest levels, Trump decided to pull India into the fray, pushing them back toward Russia and China. The jury is still out on BRICS, but clearly, U.S. policy may have moved the bar higher.
Our View
The ES has rallied 30.48% from its April 7 low and is now up over 10% on the year. It got through August with flying colors, but September has historically been the worst-performing month for the S&P 500, with an average decline of about 1.2% since 1928 and negative returns in 56% of those years.
The worst September was during the 2008 credit crisis, when Lehman Brothers collapsed—ES dropped 9.3% for the month. Their desk was right above mine on the floor. In 2024, the ES snapped a three-week winning streak and dropped a record 4.25% in the first week, marking its worst September start since 1953. Over the last 5 years, it has averaged a -4.2% return; over the last 10 years, -2%, and over 25 years, -1.5%. No matter how you do the math, September is a tough month.
September and October were always rough, and I expect we’ll see this part of this possibly starting this week with today's ISM and S&P PMI, Thursday’s CPI, and Friday's jobs number.
Our Lean — Danny’s Trade (Premium only)
MiM and Daily Recap
ES Futures Recap - Friday
Intraday Recap
The ES market action heading into and through Friday showed signs of hesitation after recent strength. Overnight Globex trade began Thursday evening at 6516.75, traded pretty much into a tight range until sellers came in at 3:10 and pushed the contract down 23 points to 6488.75. There was a slight push from there into the cash open of 6499. Overall, the market lost 17 points from its open.
The regular session opened at 6499.00 and immediately fell into pressure, posting a sharp low of 6455.50 at 10:50. That represented a 45-point slide from the open. Buyers stepped in around midday, producing a rebound toward 6474.75 by 12:45. Another test of 6465.75 at 14:20 gave way to steadier upside into the late afternoon. The market ended up closing at 6474, a 25-point slide from the open.
Market Tone & Notable Factors
Overall sentiment leaned cautious. The overnight Globex trade showed clear selling pressure with successive lower highs and lows, culminating in the early morning flush. Cash session action offered stabilization, with buyers preventing a deeper breakdown after the 6455.50 low, but recovery lacked real momentum. The ability to finish above the prior day’s settlement was a small positive, though ranges were compressed and buyers were hesitant.
The Market-on-Close imbalance data confirmed a defensive tone. At 15:51 ET, imbalance levels reached -$1.39B to sell, with sell programs outweighing buy flow by a wide margin. While the symbol imbalance held at 52.2%—not an extreme reading—the dollar imbalance reflected notable institutional selling. This helped limit late-session upside and kept ES capped just below 6492 into the close.
In sum, the day carried a neutral-to-slightly bearish tone. While the regular session held its ground with a modest positive cash-to-cash gain, the backdrop of heavy MOC selling and weak overnight structure suggested traders remain cautious heading into the holiday-shortened week. Focus now shifts to whether buyers can defend 6450 on future retests or if sellers use the holiday gap to press the market lower.
Technical Edge
Fair Values for September 2, 2025:
SP: 10.22
NQ: 43.63
Dow: 60.1
Daily Market Recap 📊
For Friday, August 29, 2025
• NYSE Breadth: 51.9% Upside Volume
• Nasdaq Breadth: 47.7% Upside Volume
• Total Breadth: 48.2% Upside Volume
• NYSE Advance/Decline: 49% Advance
• Nasdaq Advance/Decline: 38.9% Advance
• Total Advance/Decline: 42.7% Advance
• NYSE New Highs/New Lows: 108 / 7
• Nasdaq New Highs/New Lows: 133 / 69
• NYSE TRIN: 0.81
• Nasdaq TRIN: 0.69
Weekly Breadth Data 📈
For Week Ending Friday, August 29, 2025
• NYSE Breadth: 52.7% Upside Volume
• Nasdaq Breadth: 56.5% Upside Volume
• Total Breadth: 55.2% Upside Volume
• NYSE Advance/Decline: 48.3% Advance
• Nasdaq Advance/Decline: 44.3% Advance
• Total Advance/Decline: 45.8% Advance
• NYSE New Highs/New Lows: 281 / 25
• Nasdaq New Highs/New Lows: 478 / 166
• NYSE TRIN: 0.80
• Nasdaq TRIN: 0.60
ES & NQ Levels (Premium only)
Calendars
Economic Calendar
Today
Important Upcoming
Earnings
Trading Room Summaries
Discovery Trading Group Room Preview – Tuesday, September 2, 2025
Tariff Ruling: The US Court of Appeals upheld a decision limiting President Trump’s authority on global tariffs but left them in place pending potential Supreme Court review. Trump maintains, “ALL TARIFFS ARE STILL IN EFFECT!”
Housing Emergency & Midterms: Treasury Secretary Bessent suggests Trump may declare a national housing emergency, making affordability a central theme for Republicans heading into 2026.
Fed Policy & Market Moves: A 90% chance of a September Fed rate cut is now priced in by swaps. Gold surged past $3,500 (+30% YTD) on rate cut hopes. Job data remains a critical driver.
Geopolitics: Russia and China inked a legally binding deal to construct the long-anticipated Power of Siberia 2 gas pipeline.
Today’s Earnings & Data: Watch for results from Zscaler (ZS), Macy’s (M), DocuSign (DOCU), Nebius Group (NBIS), and NIO. Key economic releases include S&P Global Manufacturing PMI (9:45am ET), ISM Manufacturing/Prices, and Construction Spending (10:00am ET).
Market Technicals & Volatility:
Volatility is contracting ahead of major catalysts: Friday’s jobs report, next week’s CPI, and the Fed the following week.
ES 5-day ADR has dropped to 51.75 points.
No significant overnight whale activity.
ES retesting bottom of inside uptrend channel (6423/28) in overnight trade.
