Global risk events are simmering in plain sight. China and Japan are preparing actions against North Korea over Pyongyang's nuclear capabilities, Qatar is ostracized by its neighbors, and hacking and ransomware continually rock computers around the world. But as the risks grow, we're seeing vast investment flows into the euro and the Canadian dollar rather than the U.S. dollar and the Japanese yen (the traditional "safe" currencies).

Now, I've been predicting a weaker U.S. dollar since 2017 began, given with the Trump administration's quest for greater American competitiveness on the world trade stage. Well, dollar weakness continues to gain stream, and what was once my contrarian view in 2017's early months has since become an idea that many economists and strategists are embracing.

Note that neither global uncertainty nor a Federal Reserve intent on raising U.S. interest rates have resulted in a stronger greenback. In other words, the "weaker-dollar trade" has legs. And even though the euro has rebounded by some 10% from its near-term lows, I still maintain that we're merely seeing the start of what will end up being a significant dollar weakening going into 2018.

Has the dollar lost its safe-haven status? Is the euro just more attractive? Or is this some combination of both? Personally, I believe investors are favoring the euro over the greenback for several reasons.

For instance, European stock-market valuations seem to reflect reality, while U.S. ones arguably remain stratospheric. And on the international stage, Europe is largely minding its own business when it comes to the Middle East and North Korea. The Eurozone isn't a significant player in these disputes, so it offers shelter from the simmering storms.

Here at home, the Federal Reserve is raising rates regardless of the latest economic data, while the U.S. government seems to have thrown aside the past 30 years' strong-dollar policy. This leaves investors questioning their U.S. holdings' future value if U.S. bonds are worth less due to rising interest rates and the dollar drops due to a weaker-greenback policy.

It's true that the Giffen good nature of U.S. fixed income means there are few alternatives to U.S. Treasuries, but that doesn't mean that Treasuries are the only game in town. For example, the European Central Bank is continuing to buy its member-countries bonds, which makes them attractive to the fixed-income community. After all, the bonds are making gains on the back of euro appreciation and today's low-interest-rate environment.

The Bottom Line

Now, I doubt that much will come of the North Korean and Qatar standoffs in the 2017's second half, given both conflicts' zero-sum-gain nature.

But I'd note that any diplomatic solution amenable to all parties would likely only translate into an accelerating dollar slide. That's why I remain negative on the greenback -- specifically the dollar's value against the currencies of those nations that enjoy trade surpluses with the United States.

Frankly, U.S. exporters still need another 20% or so drop in the dollar to help their cause. I expect the next six months to likely see further movement in that direction.

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