Chart of the Month
The U.S. Dollar and Global Investing
As global attention turns toward international competition this summer, it is also a useful moment to consider how global markets interact beyond company fundamentals, particularly through currency.
The U.S. dollar has been on a rollercoaster over the past several years, reflecting shifting expectations around global economic growth, inflation, and central bank policy. While currency movements can feel like background noise, they play a more meaningful role in investor outcomes than they are often given credit for.
Can work against international investments when foreign returns are translated back into U.S. dollars. It can also reduce reported earnings for U.S. companies with meaningful overseas revenue.
Tends to support international returns and can improve U.S. competitiveness abroad by making U.S. goods and services less expensive for global buyers.
In the same way international competition often turns on conditions and timing rather than a single dominant force, these dynamics are a reminder that investing globally is about more than company fundamentals; it is also about participating in different currency cycles that move over time.
Those cycles are influenced by shifting growth trends, interest rate environments, and global capital flows.
Rather than trying to forecast currency direction, the more durable lesson for investors is simple: global markets are interconnected, and leadership rotates.
Staying diversified across regions and currencies helps reduce reliance on any single outcome and keeps portfolios positioned for a range of environments over time.
Diversification cannot eliminate uncertainty, but it can reduce dependence on any single country, currency, or market cycle.