Dollar Cracks Under Pressure: AI Selloff Finds a Second Victim
The dollar's recent recovery may be built on shakier ground than markets assumed.
Dollar Cracks Under Pressure: AI Selloff Finds a Second Victim
The dollar's recent recovery may be built on shakier ground than markets assumed. According to Apollo Global Management's chief economist Torsten Slok, speaking to Bloomberg, the currency's gains over recent weeks are directly exposed to momentum in artificial intelligence stocks — and if that momentum reverses, the dollar follows.
The logic is tighter than it first appears. Capital has been flowing into US assets on the back of AI investment euphoria, with Nvidia, Microsoft, and the broader tech complex drawing foreign money into dollar-denominated positions. Slok's warning is that this trade is now crowded enough to become a liability: a sustained AI selloff would not just reprice equities — it would trigger dollar outflows at a moment when geopolitical stress is already testing confidence in US economic leadership.
The timing matters. With the Strait of Hormuz under effective blockade, oil prices elevated, and Europe restructuring its defence and energy spending away from dollar dependency, the currency faces pressure from multiple directions simultaneously. The AI trade has been the counterweight. Remove it, and the arithmetic changes.
For markets already navigating conflict premiums across three theatres, the prospect of dollar weakness layered onto energy disruption is not an abstract scenario. Per Bloomberg, Slok stopped short of calling a reversal — but the warning itself, from a house of Apollo's standing, carries weight traders will not ignore.
