Chart of the Week

U.S. tariff and budget uncertainty have whipsawed both equity and fixed-income markets this year, but perhaps the most worrisome asset move for many investors has been the U.S. dollar’s noticeable selloff. The U.S. Dollar Index has dropped more than 10% year to date through June 30, 2025, sparking worries about the dollar’s potential demise.

As shown in the chart, however, the U.S. dollar accounts for an overwhelming majority of the currency share for various measures of global foreign trade and investment. Taking this statistical approach to analyzing the U.S. dollar’s role, it is clear to us that the greenback remains the linchpin of global trade and finance and is far from becoming irrelevant.

We prefer to avoid making portfolio adjustments on speculation that the dollar may be in danger of losing its global status soon. Over the longer term, there is a risk of the slow erosion seen in recent years persisting. For now, however, we believe the U.S. dollar benefits from deep-seated advantages that make a global shift away from it a difficult, slow-moving process. For further detail, please see our Special Report, “The dollar’s future as an international currency.”

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Foreign investing has additional risks including those associated with currency fluctuation, political and economic instability, and different accounting standards. These risks are heightened in emerging markets. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates.

Currency risk is the risk that foreign currencies will decline in value relative to that of the U.S. dollar. Exchange rate movement between the U.S. dollar and foreign currencies may cause the value of a portfolio's investments to decline.

The United States Dollar Index or DXY measures the performance of the dollar against a basket of other currencies including EUR, JPY, GBP, CAD, CHF and SEK.

An index is unmanaged and not available for direct investment.

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