The US Dollar's Path Ahead in 2026

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00:00The U.S. dollar posting its worst week since June with Bloomberg's dollar index showing the greenback

00:04on course for its steepest yearly drop since 2017. Lots of questions around debasement. Bloomberg's

00:11Skylar Montgomery Koenig joins us now. And Skylar, thank you so much for being with us. Before we get

00:15to the dollar and the path ahead, I'm curious your view on how much you consider gold and silver

00:22when discussing whether we are seeing truly a debasement trade take hold.

00:26Yeah, I mean, I think the one place that you can see investors really pivot away from

00:32the dollar is in COFR data. So central bank reserves have pivoted away from the U.S. dollar, but

00:38it's not landed in one currency specifically because there is no clear alternative, which

00:43is the issue. Now, I bring this up because there's also been a pivot into gold, and I think that's

00:47increased enthusiasm for assets generally that are more out of the norm. And for the dollar,

00:53it's not a big impact because it's a small flow. But for gold, it is very much a big flow

00:58relative because it's a smaller market. So I think it's, you know, definitely symptomatic

01:03of that trade, but it doesn't necessarily mean that you're going to have big dollar downside

01:07because COFR reserves, the share for the dollar has been declining for something like two decades

01:12now. And you've had big cyclical dollar bull markets in that period. So it's a small flow

01:17for the U.S. dollar, especially as it still dominates trade flows, it still dominates financial

01:21flows, but it's a big flow for gold. How much is a weakening dollar, a consensus trade heading

01:27into 2026? I think it's more mixed than maybe the headline numbers tell you. What you tend

01:34to see actually is at the beginning of the year, if there's not a strong bias, you tend to have

01:40consensus go towards dollar weakness. And that's because you've had dollar overvaluation on a number

01:46of metrics for a very long time now. Now, I think the issue is those metrics is they don't take

01:51into account productivity gains. And so on that measure, you'd say valuations should have a

01:56structural break higher because the U.S. has been more productive than a lot of its developed

02:00market peers. So I think, you know, when there isn't a clear bias as we had at the beginning of

02:06last year, which was actually for dollar strength, you tend to see dollar weakness come out as the

02:11favored trade at the beginning of the year and year ahead outlooks.