MUFG Research’s Lee Hardman said in an Oct. 19 note that foreign investment in U.S. assets leaves the dollar exposed if enthusiasm for artificial intelligence fades.
Foreign investors purchased a net $1,009.6 billion in U.S. equities and $464.1 billion in U.S. corporate bonds over the 12 months through August, Treasury figures show. The combined $1.47 trillion includes private and official investors.
Hardman’s note used an earlier snapshot. He cited about $942 billion in equity purchases and $452 billion in corporate bond purchases for the 12 months through July. Treasury released the August figures on Oct. 16, showing higher totals in both categories.
Those transactions show the scale of foreign buying, but Treasury’s data do not establish that AI optimism drove it. The department also cautions that its custody-based records cannot fully identify foreign ownership. The connection between AI sentiment and the dollar’s vulnerability is Hardman’s assessment.
Hardman said the dollar index reached a 2026 high of 102.95 after four consecutive weeks of gains, then closed lower the previous week. It had since fallen below its 200-week moving average, which he placed near 102.10. He said the index was last consistently above that average before the April 2025 “Liberation Day” tariff announcement.
The International Monetary Fund (IMF) raised a related market risk in its October Global Financial Stability Report. Weaker or less durable AI investment and profitability could lower prices for assets tied to AI, it said, while leverage and concentrated holdings could deepen a decline.
A previous EconoTimes report on OCBC’s dollar outlook described another possible link between AI investment and the currency. OCBC said doubts about financing or expected returns could weigh on capital spending, equities and yields, reducing the dollar’s yield advantage.
The U.S. Bureau of Labor Statistics (BLS) reported that the Consumer Price Index rose 0.6% in September from August after seasonal adjustment and 3.7% from a year earlier without seasonal adjustment. The Federal Open Market Committee (FOMC) is scheduled to meet Oct. 27-28.
