Shifting global investment patterns are challenging the strength of the U.S. dollar, according to a top commodities broker.
Transcript:
CARLEY GARNER: My outlook for the U.S. dollar is relatively bearish. We had a nice rally after Trump was elected in November, again part of the Trump trade. The idea was it would be we’d have a stronger dollar due to tariffs and inflation and those sorts of things. But what really ended up happening was a lot of hot money from around the world came into the U.S. stock market. There was an idea that of U.S. exceptionalism. I’m not going to argue that one way or the other, but that’s the reality. Money flowed into the U.S,, went into stocks, and in the meantime, it pumped the U.S. dollar up. And now we’re seeing that kind of rewind itself. And I think it’s going to continue. If you look at the Trump 1.0 administration, we saw the dollar start off elevated and it continually worked its way lower through the four years. I think at the time, we were around 103. We ended up around 88 towards the end of his tenure. So I don’t necessarily expect to see an 80 handle, but I think we can see the low 90s in the dollar, so I expect it to weaken.
I do think the dominance of the U.S. dollar is at risk, not necessarily for political reasons, but simply for money in and outflow reasons. For example, money that the hot money that came into the dollar and the U.S. stock market after the election of President Trump is now working itself out. And that’s going to be a process that has to work its way through the system. I don’t think it’s done yet. I’m expecting the dollar to head quite a bit lower.
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