Citigroup strategists reportedly said the artificial intelligence (AI) boom and the resiliency of global trade have reversed the weakness in the U.S. dollar that was seen during the first half of the year.
Citi strategists recommended in a Tuesday (Dec. 2) research note that emerging-market investors seek trades that would cushion against a potential rebound in the dollar, Bloomberg reported Tuesday.
The AI boom and the resiliency of global trade amid higher U.S. tariffs have reversed the earlier weakness in the dollar, Citi said, according to the report.
“These two important factors combined generated a gradual comeback to U.S. exceptionalism, ultimately changing the dollar dynamics once again,” the research note said, per the report. “Barring significant repricing in U.S. equities, we believe global markets are likely to remain in this regime, which basically means a more resilient USD.”
Citi strategists see greater potential for a rebound in the U.S. dollar than their peers at other banks, the report said.
Strategists at Morgan Stanley, Bank of America and Goldman Sachs expect more weakness in the dollar, saying that Federal Reserve rate cuts will put downward pressure on the U.S. currency, according to the report.
Companies are sprinting to build the data centers and buy the chips needed to train and run large language models amid the continuing AI boom, PYMNTS reported in September.
AI captured 42% of U.S. venture capital in 2024, up from 36% in 2023 and 22% in 2022. During the first half of 2025, AI startups raised $104.3 billion.
Private capital is stepping in, too, with the AI boom representing as much as a $1.8 trillion opportunity for non-bank lenders.
As for tariffs, it was reported in October that global companies expect the impact of these levies to lessen as more countries negotiate new trade deals with the U.S.
While companies expect their combined cost of tariffs to total between $21 billion and $22.9 billion this year, they expect it to drop to $15 billion in 2026.
In addition, companies feel there is less uncertainty around tariffs now and that they are better able to make plans.
The PYMNTS Intelligence report “Profit Slips, Policy Shifts: Product Leaders Navigate the Crossfire” found that companies are adjusting portfolios, forecasting models and supply strategies around the assumption that trade levies will define the landscape for years.
Source: https://www.pymnts.com/