Barclays Brief US Dollar & the AI capex cycle
Nov 18, 2025
Themos Fiotakis, Global Head of FX and EM Macro Strategy at Barclays, dives into the fascinating intersection of AI-driven capital expenditures and currency markets. He discusses how the immense pledges for AI investments are not currently reflected in FX market reactions, exploring historical investment cycles and the implications for the dollar. Themos also examines the risks surrounding CapEx financing, the ongoing narrative of de-dollarization, and highlights the potential benefits for metals exporters amid rising AI demand. Buckle up for insights on the future of the dollar!
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Massive AI CapEx, Minimal FX Reaction
- US private sector AI CapEx pledges could exceed $3tn over five years and FX has barely reacted.
- The equity market priced the boom but FX remains in a parallel universe, showing puzzling inertia.
Investment Booms Often Strengthen Currencies
- Past investment booms boosted GDP and unusually improved external balances and current accounts.
- Those cycles typically strengthened the currency by a few percentage points per year despite bigger investment needs.
Tech Profits Underpin Dollar Strength
- US cloud and tech profit gains have been a key underpinning of dollar strength over the last decade.
- Greater foreign revenue and capital accumulation in dominant US firms have supported the greenback.