Jens Nordvig, CEO of Exante Data, believes that the dollar’s recent rebound following the easing of US-China trade tensions is short-lived, and is predicting the start of a multiyear bear market for the greenback, according to a report by Bloomberg.
Nordvig, who advises major global investors, including hedge funds, pensions, and sovereign wealth funds, is concerned that the Trump administration’s erratic trade policies have irrevocably damaged investor confidence in the dollar.
According to Nordvig, institutional investors who have accumulated trillions in US assets over the past decade are still in the process of adjusting their portfolios. Although some speculative traders quickly sold the dollar after recent tariff increases, large investors are taking longer to make adjustments. Nordvig warns that the real pain is yet to come as these players look for opportunities to reduce their dollar exposure.
Despite a surge in the dollar following a US-China trade truce, the greenback has fallen over 5% year-to-date due to concerns over slower US growth and rising inflation. Nordvig, who first turned bearish on the dollar in March, sees this as part of a broader structural shift away from the US currency, with foreign investors, particularly from Asia, potentially leading a wave of dollar asset sales.
With foreign holdings of US securities now totalling $32tn, Nordvig believes we are at a pivotal moment, and is advising clients to position for gains in the euro and gold, given the increasing likelihood of a long-term shift in asset allocation away from US assets.
He also expects pressure on the dollar to intensify around September, as tariff-driven inflation subsides and the economy slows, potentially prompting the Federal Reserve to lower interest rates.
