LIVE MARKETS-A positive global outlook bodes badly for US dollar

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A POSITIVE GLOBAL OUTLOOK BODES BADLY FOR US DOLLAR

An improving outlook for global growth is dimming U.S exceptionalism and is likely to be a negative for the U.S. currency going forward, according to Deutsche Bank.

The global PMI is at its long-run average of 53, but stock markets are showing more bullishness, with the global earnings revision ratio at a 4-year high, and at the 87th percentile of the past two decades, Tim Baker, macro strategist at the bank said in a report.

“That’s an upbeat signal for equity markets – earnings revisions above zero are associated with annual share price gains of ~10%.”

Baker notes that the growth is not just a U.S. story, with a convergence in earnings revision ratios elsewhere to a very similar level over the past six months. In fact, all 35 of the major markets Deutsche Bank scanned are up in 2025.

“This is a shift from the last two years of mixed performance globally while US equities generally marched higher. The S&P 500 has underperformed in 2025, and is roughly a market performer since mid-year,” Baker noted.

But for forex, this is negative for the U.S. dollar. “While the US economy and equity market is in a decent spot, exceptionalism by definition is fading when Rest of World is in better shape.”

As stock markets in the rest of the world trend higher, emerging market currencies should be supported. Deutsche Bank said it favors the Brazilian real and CE3 currencies – the Polish Zloty, Czech Koruna and Hungarian Forint.

(Karen Brettell)

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