Equities up, bonds behaving but what is the US dollar telling investors?

Markets are forward looking and are one of the strongest indicators of what lies ahead for global economies. This dynamic reflects the thinking of millions of market participants digesting and pricing available information to guide how asset prices reflect the future.

For all the twists, turns, and curveballs that 2025 has delivered, markets are, in many cases, at or above where the year started. The S&P 500 is in the green, the ASX 200 is up, and yields on US 10-year bonds, a useful proxy for risk appetite, are lower than at the start of the year.

At face value, you might conclude that investors are more confident about the economic outlook, or at the very least more comfortable than they were in January.

But not all signals are flashing green. A 10% fall year-to-date in the safe-haven US dollar is one example that warrants closer inspection. That’s the view of Fidelity International’s Chief Investment Officer of Equities, Niamh Brodie-Machura, who oversees a team of more than 120 analysts managing over $220 billion for Fidelity clients.