American dollars aren’t traveling very well

That feeling when stopping for churros in Spain digs more into your pocket than expected: US greenbacks are significantly in the red versus its international peers so far this year, placing a major damper on the purchasing power of American travelers going abroad.

• The ICE US Dollar Index, which compares the dollar to currencies from six other countries, just wrapped up its worst first half in over five decades (-10.8%).
• The dollar has fallen 13% against the euro, 6% against the Japanese yen, and 8% against the British pound, making goods that much more expensive for Americans overseas.

It marks a stark reversal of currency conditions as recently as last year, when a strong dollar lifted Americans’ purchasing power on imported goods and fueled an international travel boom.

Making cents of it all

Analysts say the dollar’s fall so far this year is due to global investors reacting negatively to recent trade tensions, rising government deficits, and uncertainty over Federal Reserve policy. Many experts project the US dollar will drop further in the coming months as these factors persist, despite a relatively strong US economy.

But this could be good for some businesses. A weaker dollar makes US exports cheaper internationally, and also juices company profits from overseas units after converting back to dollars. The dollar’s falling exchange rates in Q2 are expected to boost the bottom lines of large multinational companies, who kick off earnings season this week.

Big picture: S&P 500 companies collectively generate more than 40% of their revenue from international sales.