Recently, Bank of America released a report pointing out that AI is changing from a technology concept to an important factor affecting the global economy. Understanding how AI affects the U.S. dollar, the world's main reserve currency, has become something investors must grasp when allocating assets.

However, the impact of AI on the dollar is not simply "good" or "bad", but is complex and phased.

The first stage: The AI money-burning boom indirectly supported the US dollar

Many people think that the United States is leading in the field of AI and AI stocks have risen sharply, which will naturally strengthen the dollar. But it's not that simple. Bank of America pointed out that although AI concept stocks rose hot in the second and third quarters of 2025, the US dollar index basically spun in place and did not rise with it.

In fact, in the long run, technology stocks (such as the Nasdaq) and the dollar tend to "go against each other" - when technology stocks rise, the dollar tends to fall.

Why? Because short-term fluctuations in stock prices are not the key to determining the strength of the US dollar. But don't worry, AI actually has another, more tangible impact on the dollar: it's driving investment like crazy.

According to the analysis of economists at Bank of America, AI-related investments alone may contribute 1.2% and 1.3% to the GDP growth of the United States in the first and second quarters of 2025, respectively, mainly from corporate spending on chips, data centers, and software development.

This chain is clear:

Therefore, although the AI stock price did not directly push up the US dollar, the "money burning wave" brought about by AI really supported the fundamentals of the US dollar. Bank of America believes that as long as this round of AI investment continues, the US dollar will have a "bottom" and will not be easy to weaken sharply.

Stage 2: AI impacts employment, and the US dollar is under pressure in the short term

When AI moves from "burning investment" to "practical application", the labor market will be the first to be affected - and this may put short-term pressure on the dollar.

Bank of America observed that the current job market in the United States has a "two lows" phenomenon: less hiring and fewer layoffs. This shows that companies have become very cautious in the face of AI and automation, especially reluctant to recruit new people, especially entry-level positions

A more obvious signal is that the unemployment rate of young people aged 20 to 24 is rising rapidly, much higher than that of the main workforce between the ages of 25 and 54; Large companies such as Amazon, UPS, IBM, and Target have announced layoffs one after another, many of which are related to AI replacing labor. If there is more data in the future to prove that AI is really triggering a wave of large-scale layoffs, it will not be good news for the US dollar

Why? Because once the job market deteriorates significantly, the Fed may be forced to speed up interest rate cuts and increase easing to stabilize the economy

And when interest rates fall, the dollar usually weakens. Therefore, Bank of America reminds that the impact of AI on employment is one of the biggest risks to the US dollar in the short term

Stage 3: Long-term decisive battle - is AI a "growth engine" or a "deflationary killer"?

Bank of America believes that after the impact of AI on the job market passes, its long-term impact on the dollar will depend on two opposing forces:

1. If AI brings deflation (bad for the dollar)

When AI replaces manual labor on a large scale, the production cost of goods and services drops significantly, which may lead to a general decline in prices (aka "deflation").

If the unemployment rate is also rising at this time, the economy will be under more pressure. In this case, the Fed is likely to be forced to cut interest rates sharply and release water to rescue the market.

And once the US interest rate advantage weakens (the US dollar is now one of the highest-yielding currencies in the G10), funds may flow out of the US, causing the US dollar to depreciate.

2. If AI significantly increases productivity (positive for the dollar)

Another possibility is that AI not only saves money, but also makes the entire economy more efficient - enterprises produce more, innovate faster, and return more.

This will push up the U.S. "real neutral rate" (simply put, the level of interest rates that should be when the economy is healthy) and attract global capital to invest in the United States.

There are precedents in history:

In 1995–2002, the U.S. dollar appreciated sharply as the information technology revolution led to a sharp increase in productivity, as the world wanted to share in the U.S. growth dividends.

Jingtai view: The report emphasizes that the impact of AI on the US dollar is not static, but a phased and changing process.

Investors cannot simply think that "strong AI = strong US dollar" or "weak AI = weak US dollar". A smarter approach is to establish a phased observation framework that focuses on three key indicators:

Only by continuously tracking the changes in these three variables can we more accurately judge the future trend of the US dollar in the process of AI reshaping the global economy.