Investment advisory firm BCA Research is encouraging investors to adopt a long position on the U.S. dollar, emphasizing its role as a protective asset amid ongoing geopolitical uncertainties. In its latest report, BCA highlights how increasing global tensions are positioning the dollar as a safe haven.
BCA’s Chief Geopolitical Strategist, Matt Gertken, suggests that regardless of the upcoming U.S. election outcome, American trade and foreign policy are likely to shift in a more assertive direction, contributing to global instability. “The international political landscape is becoming more volatile,” Gertken notes, explaining that this trend is likely to continue reinforcing the dollar’s appeal as a defensive option.
The report singles out the Middle East as a significant area of concern, particularly focusing on escalating hostilities between Israel and Iran. Although markets may appear stable, BCA cautions against complacency, pointing out that recent direct conflicts between the two nations represent a dangerous escalation. “Israel’s recent moves indicate the potential for more intense conflict,” Gertken adds.
Gertken also notes that prior to this year, Israel and Iran were not engaged in open conflict, nor was there a push for regime change in Iran. The current atmosphere, however, could encourage Iran to advance its nuclear program, potentially destabilizing the region further. This, in turn, poses risks to global oil supplies, with BCA estimating a 40% chance of major disruptions if tensions continue to rise, which could drive up oil prices and enhance the dollar’s status as a safe-haven currency.
Beyond the Middle East, the report highlights other areas of mounting geopolitical risk, including North Korea’s closer ties with Russia and potential conflict on the Korean Peninsula. In Europe, a protracted U.S.-Russia standoff over Ukraine and rising populism could challenge EU unity and further weaken the euro. Gertken suggests that a win by Trump in the U.S. elections could amplify these pressures, as potential tariffs on European goods could strain international trade and further bolster the dollar’s position.
BCA’s recommendation underscores a strategy of dollar resilience amid what it describes as global complacency towards escalating geopolitical risks. “Global stability is deteriorating, yet markets seem to underestimate these threats based on our geopolitical risk indicators,” the report states.
Consequently, BCA recommends that investors “go long on the dollar” to protect against these mounting global risks, framing it as a strategic move in uncertain times.
