AI Trading Reversal Could Undermine Dollar Safe-Haven Status Amid Rising Foreign Capital Outflow Risks

On October 28, citing Jinshi Data, as overseas capital continues to flow into US AI-related stocks, corporate bonds, and power infrastructure, the US dollar is increasingly intertwined with the US tech investment boom. Dominic Bunning, head of foreign exchange strategy at Nomura Securities, noted that if AI trades reverse, it remains uncertain whether the US dollar will continue to benefit from safe-haven demand as it has historically.

Analysts note that if AI investment returns fall short of expectations, it could trigger a sell-off of tech assets, widen corporate credit spreads, and slow US economic growth, thereby undermining the dollar's yield advantage and capital inflow support. However, should global demand for dollar funding surge, the dollar may still strengthen due to short-term liquidity needs.