I had a privilege of joining Becky Quick on CNBC's Squawk Box to talk about the dollar. I suggested there may be scope for the Dollar Index to fall another 5% over the remainder of the year. I am not so focused on the dollar losing its reserve currency status but cyclical developments. The Fed may resume its easing just as several other central banks wind down their rate cuts, like the ECB, Bank of Canada, Sweden, and Norway. The markets often seem to ascribe structural and strategic forces at work initially to what ultimately proves to be cyclical and tactical.
The US TIC data, which is only through March, showed foreign investors were larger net buyers of US assets in Q1 25 than Q1 24. It is not many not only be foreign investors selling dollars and US assets, but dollar-based investors also appear to be diversifying after being overweight the US. The decline in the dollar offers an important kicker for dollar-based investors. Consider that the DAX is up a bit more than 21% in euro terms and for dollar-based investors the return is almost 34%. Europe's Stoxx 600 has appreciated by 19% for dollar-based investors and almost 8.5% for euro investors.
Check out the clip here.
Reviewed by Marc Chandler
on
June 04, 2025
Rating:
