Cathie Wood Warns US Dollar Could Surge, Shaking Markets

The ARK Invest chief executive believes the US dollar is far stronger than widely assumed and may climb notably in the coming years.

Why should investors care? A rising dollar could pressure gold, alter bond positioning, and test Bitcoin's recent capacity for swift gains.

Wood: Investors Focus on the Wrong Dollar Chart

Most market participants track the US Dollar Index (DXY), which measures the dollar against six major currencies. ARK contends that gauge is obsolete.

The Federal Reserve's broader index includes 26 countries and revises its weightings annually. By that metric, Wood says the dollar has risen 36% since August 2008 and currently sits 44% above its long-term average.

"Contrary to the current narrative, the dollar has not been weak relative to the currencies of our trade partners," Wood wrote.

Her reasoning is straightforward. Tax breaks are motivating firms to reinvest in US manufacturing and data centers, and she expects Fed Chair Kevin Warsh to sustain strict monetary policy.

Wood draws a parallel with the early 1980s, when stronger US returns drove the dollar sharply higher.

In September, the DXY already registered its best month since June, advancing almost 2% as the Fed raised rates and flagged additional increases.

Gold and Bitcoin Add Complexity to the Trade

Gold presents the biggest counterpoint to Wood's view.

The dollar has lost 92% of its purchasing power relative to gold since 2002. Wood believes tighter policy could partially unwind that trend.

Gold has dropped from its January record of $5,602 to about $4,140. Morgan Stanley's Amy Gower still views $4,000 as solid support, bolstered by central-bank purchases.

That makes $4,000 a critical threshold for investors assessing Wood's outlook.

Bitcoin provides another clue. BTC typically struggles during a dollar rally, yet it rose 6.14% in September while the DXY also gained.

If that divergence persists, Bitcoin may be acting differently than in past dollar cycles. If it falters, Wood's dollar-strength call could pose a much larger threat for crypto investors.