Canadian Dollar vs. US Dollar. The Spring is Compressing
In previous posts, we have already begun to look at the key drivers of the US outperformance over the past decade.
The US market dominance has been largely driven by the rapid rise of tech giants (such as Apple, Microsoft, Amazon and Alphabet), which have benefited from strong profit growth, global market reach and significant investor inflows.
Unsatisfactory International Performance
Markets outside the US have faced headwinds including multiple stifling sanctions and tariffs, slowing economic growth, political uncertainty (especially in Europe), a stronger US dollar and the declining influence of high-growth tech sectors.
The Valuation Gap. By 2025, US equities will be considered relatively expensive compared to their international peers, which may offer more attractive valuations in the future.
Recent Shifts (2025 Trend)
Since early 2025, international equities have begun to outperform the S&P 500, and European and Asian equities have regained investor interest. Global market currencies are also widely dominated by the US dollar.
Factors include optimism around the following three big themes.
DE-DOLLARIZATION. DE-AMERICANIZATION. DIVERSIFICATION.
De-dollarization is the process by which countries reduce their reliance on the US dollar (USD) as the world's dominant reserve currency, medium of exchange, and unit of account in international trade and finance. This trend implies a shift away from the central role of the US dollar in global economic transactions to alternative currencies, assets, or financial systems.
Historical context and significance of the US dollar
The US dollar became the world's primary reserve currency after World War II, as enshrined in the Bretton Woods Agreement of 1944. This system pegged other currencies to the dollar, whi