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Near-term equity market inflows linked to bumper IPOs bolstering the dollar, but longer-term weakness still on the cards.
New analysis from Julius Baer, the private Swiss bank, shows the dollar is finding near-term support as international investors position for a series of significant 'AI-era' IPOs.
"Safe‑haven flows and blockbuster IPOs are attracting inflows," says David Alexander Meier, an analyst at Julius Baer in Switzerland. He explains the demand is offsetting the structural headwinds faced by the dollar due to substantial current account outflows.
SpaceX has filed IPO documentation and is reportedly targeting a June 2026 listing, which would make it the largest IPO in history.
Reports suggest a valuation of roughly $1.5-1.8 trillion and a capital raise of between $50bn and $75BN.
Anthropic - the owner of Claude AI - formally submitted confidential IPO paperwork to U.S. regulators on June 1 in what is the clearest signal it intends to become a public company.
The filing positions Anthropic to potentially list before OpenAI.
"Upcoming blockbuster IPOs in the U.S. have the potential to offset structural outflows from substantial current account deficits by attracting significant inflows," says Meier.
The dollar index - a measure of broad dollar performance - rose in May and is now sitting on a gain for 2026, despite starting the year under pressure. It fell nearly 10% in 2025 in what was its largest annual fall since 2003.
Other sources of support include the rise in oil prices linked with the Iran war and a series of data releases that confirm the U.S. economy is in robust shape.
Despite recent USD resilience, Julius Baer says the longer-term view continues to favour USD weakness as IPO demand recedes and the structural headwinds that emerged through 2025 blow stronger.
"Looking ahead, interest rate differentials could regain importance, especially if de-escalation happens but inflationary aftereffects prompt policy action. We now expect the ECB to deliver an insurance rate hike, while the US Fed stays on hold and resumes cuts in 2027, allowing the US dollar to soften," says Meir.
"The longer‑term weakening narrative tied to current‑account outflows remains intact, though the lower energy sensitivity of the US and potential artificial intelligence‑related IPO inflows may slow depreciation. At the same time, fiscal risks compounded by the war could emerge as a headwind," he adds.
Key forecasts from the Swiss bank include the pound-dollar pair trading at 1.41 on a one-month windown.
Euro-dollar is seen at 1.24 and dollar-franc at 0.74 in twelve months.