Deutsche Bank highlights a shift in the dollar’s safe-haven status due to heightened AI exposure in U.S. equities. Traditionally, investors flock to the dollar during stock downturns; however, George Saravelos, the bank’s global head of FX research, notes a diverging trend. The dollar’s correlation with the S&P 500 is weakening, with the tech sector, particularly software stocks, experiencing a significant sell-off over AI concerns. Prominent firms like Amazon, Microsoft, and Meta plan substantial AI investments, raising questions about their justifications and returns. Consequently, over $1 trillion was lost in big tech market caps. Saravelos suggests a historical precedent, where negative equity news in the U.S. can lead to dollar depreciation amidst global outperformance. Additionally, with global growth picking up, currencies like the Australian dollar are becoming more appealing. The dollar index has decreased 9.4% in 2025 and 1.4% year-to-date, prompting investors to hedge dollar exposure more than ever.
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