Global Markets Daily: Tech Support—The AI Boom and The Dollar

Research evidence excerpt

Global Markets Daily: Tech Support—The AI Boom and The Dollar

Economics Research

24 June 2026 | 2:07PM EDT

n Coming into the year, we argued that less exceptional US performance should Lexi Kanter

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lead to a weaker Dollar over time. Not only has the conflict in the Middle East alexandra.kanter@gs.com

Goldman Sachs & Co. LLC

disrupted expectations for more notable relative underperformance, but a surge

in AI momentum has also challenged that narrative. The strength of the AI trade

has driven another leg of US equity outperformance; if anything, the Dollar has

appeared slightly weaker than expected from this perspective alone.

n We see three reasons that help explain the flatter Dollar relative to clear US

equity outperformance. First, US equity outperformance is less pronounced

versus EMs than DMs, and flows tend to matter more for EM FX. Second, we find

evidence that durability matters: sharp upgrades to near-term US earnings

expectations do not generate as much Dollar demand as more sustained

earnings power would. Third, narrow equity market breadth appears to limit FX

spillovers.

n Together, these factors reinforce that relative equity returns can proxy broader

balance-of-payments pressures that influence exchange rates. While they

suggest that this year’s tech sector strength may overstate the extent of US

outperformance and demand for Dollar assets, the broader equity impulse has

clearly shifted from an expected drag to a source of support for the Dollar.

Tech Support—The AI Boom and The Dollar

Demand for US equity exposure has increasingly helped fund the US current account

deficit, supporting the Dollar’s rich valuation in recent years. Coming into 2026, we

argued that less exceptional US performance should lead to a weaker Dollar over

time.