Deutsche Bank sees US dollar risks around the Greenland noise

The U.S. is facing a growing backlash from Europe over its policies regarding Greenland, with European countries holding $8 trillion in U.S. assets, almost double the rest of the world combined. Deutsche Bank highlights the risk that European nations may reduce funding for U.S. deficits amid these tensions, evidenced by last year's cash repatriation from Danish pension funds. The U.S. hardline stance has previously triggered increased defense spending in Europe and this could serve as a catalyst for a unified European strategy in response. Deutsche Bank believes that a dip in the euro could present a buying opportunity, as seen with the euro rebounding today to 1.1645 from a six-week low. Furthermore, with the U.S. Net International Investment Position at historic lows, the weaponization of capital is becoming evident as markets look toward Treasury yields when U.S. markets reopen on Tuesday.