Rebecca Patterson says capital is continuing to move out of the United States, and that shift could keep pressure on the dollar this year.
In a Bloomberg interview, the former Bridgewater chief investment strategist says she expects the US dollar to weaken again, pointing to cross-border capital flows as a key driver behind the trend.
“I think we’re going to have a weaker dollar again this year, maybe not to the same degree as last year. But what’s interesting to me about what’s pulling the dollar a little bit is the flow. We are seeing more money leaving the United States, a continuation of what we saw last year, money going into Europe, into Japan, into emerging markets.”
She says the shift reflects a mix of valuation opportunities, fiscal policy differences and portfolio diversification.
“Some of that is still relatively attractive valuation. Some of it is fiscal stimulus in these countries, making them more interesting. And some of it is diversifying against risk to the AI trade.”
According to Patterson, the ongoing net outflow could limit any meaningful rebound in the USD.
“But I think that capital flow net leaving the US is going to keep a lid on any dollar strength.”
During the first six months of 2025, the value of the US dollar plunged 11% against other currencies, marking the sharpest decline in 50 years. Since then, foreign investors have been adding hedges to their exposure to US-based assets, contributing to the sustained weakness of the dollar.
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