Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by Nate Kreinbrink, financial Planner at NelsonCorp Wealth Management. Welcome back Nate.
Nate Kreinbrink:
Thanks again for having me again.
Brandy Auterson-Hurst:
So the dollar had a strong rally late last year, but now it’s pulling back. What’s happening?
Nate Kreinbrink:
Well, that’s true. The US dollar had a strong finish to close out last year. However, as we’ve gotten more into 2025, it started to show some signs of weakness. Now, this shift is especially interesting as concerns of the tariffs, trade wars possibly triggering global recession have began to grow. Now, the US dollar tends to rise in cases like this as history has shown that when the markets become nervous, investors rush to the dollar for safety. You can see there towards the left and the red that that’s exactly what we saw in 2008 during the financial crisis. We saw it again in 2020 when the pandemic hit, and then even late last year when global uncertainty was rising. However, today instead of another surge, we’re seeing the dollar peaked in January right as bond yields typed out, and it has been declining since then. Now that’s a big clue because if investors truly believe that a global downturn was coming, we’d expect the dollar to be rallying, not necessarily pulling back. So while uncertainty still exists in the markets, the widespread fear that typically drives a flight to safety, it’s kind of missing.
Brandy Auterson-Hurst:
Okay, so does this present any new risk for investors?
Nate Kreinbrink:
Well, it can. I mean, a declining dollar makes US assets less attractive to foreign investors, essentially putting additional pressure on the financial markets. Additionally, this could lead to, from a portfolio standpoint, some opportunities with some international type investments. However, at the end of the day, we primarily view this recent weakening in the dollar as a positive sign that a global recession is less likely as investor confidence remains intact.
Brandy Auterson-Hurst:
All right, Nate, thanks for your insight today.
Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.