Reuters: US stocks fall amid declining dollar exchange rate

According to Reuters, unsustainable US policies could weaken the dollar, risking a decline in US asset prices. For the first quarter, S&P 500 stocks have recorded losses of about 6% in dollar terms.

George Saravelos of Deutsche Bank notes that investors outside the United States holding dollar-denominated assets without currency hedges have experienced significant losses at the start of the year, particularly European market participants. Changes in German fiscal policy have driven the euro up by 5% against the US dollar, Reuters reports.

Saravelos highlights a concerning shift: the dollar, traditionally seen as a safe-haven asset, is now weakening simultaneously with falling America's Stocks. This breaks from the historical pattern of the dollar strengthening during periods of market stress. The divergence reflects growing concerns about uncertainty surrounding states' policy and its economic outlook.

If the dollar's reliability as a safe asset continues to decline, the attractiveness of US investments may diminish. Saravelos warns that a further change in the correlation between the dollar and equities could lead to a significant reduction in dollar holdings.