US Dollar: Cyclical drivers and de-dollarisation – Rabobank

§ 01 Executive Snapshot

• What: The article discusses the ongoing de-dollarisation debate and its implications for the US Dollar amidst cyclical economic factors.
• Who: Jane Foley, Senior FX Strategist at Rabobank, and US authorities.
• Why it matters: Understanding the dynamics of the US Dollar is crucial for global finance, especially as countries seek alternatives to the USD payments system.

§ 02 Key Developments

• The de-dollarisation debate intensified in April 2025 when the USD and US Treasuries failed to attract safe-haven bids following tariff announcements.
• There is a clear incentive for various countries and regions to reduce reliance on the USD payments system, suggesting that the debate will persist.
• Despite the de-dollarisation efforts, cyclical factors like interest rate differentials and US macro resilience will continue to influence Dollar movements.

§ 03 Strategic Context

• The discussion around de-dollarisation has gained traction, particularly after the failure of traditional safe-haven behaviors during geopolitical tensions.
• The ongoing shift towards de-dollarisation reflects broader global economic changes and challenges to the USD's dominance, which will likely face resistance from US authorities.

§ 04 Strategic Implications

• The immediate consequence could be increased volatility in FX markets as countries explore alternatives to the USD.
• Long-term, a gradual shift away from the USD could reshape global finance, impacting US economic influence and monetary policy.

§ 05 Risks & Constraints

• Regulatory pushback from US authorities could slow the de-dollarisation process, maintaining the USD's dominance in the short term.
• Competition from alternative currencies and payment systems could disrupt the current reliance on the USD, leading to market uncertainties.

§ 06 Watchlist / Forward Signals

• Monitoring the outcomes of the next US presidential election could provide insights into future USD policies and de-dollarisation efforts.
• Key developments in interest rate decisions among G10 countries will signal shifts in FX rates and potential impacts on the USD's position.