In early 2025, the S&P/TSX Composite Index reached an unprecedented high of 27,993.43, marking a significant milestone in Canadian financial history. This surge was not merely a local phenomenon; it was driven by a confluence of global factors, including expectations of U.S. Federal Reserve rate cuts, a depreciating U.S. dollar, and soaring commodity prices. For investors, this moment represents a pivotal opportunity to capitalize on the intricate relationships between currency shifts and equity markets.
The Weakening Dollar: A Tailwind for Emerging Markets
As of 2025, the U.S. dollar has depreciated nearly 10% year-to-date, a trend largely fueled by fiscal uncertainties and evolving global trade dynamics. A weaker dollar acts as a double-edged sword; while it poses challenges for U.S. exports, it simultaneously enhances the attractiveness of emerging market (EM) equities.
Historically, periods of dollar weakness have seen EM equities outperform developed markets. For example, from 2004 to 2011, EM stocks significantly outperformed their developed counterparts during times when the dollar stabilized or weakened. In 2025, the MSCI Emerging Markets Index is trading at a staggering 35% discount to developed markets on a price-to-earnings basis and a 48% discount on a price-to-book basis—levels that are near historical lows. This valuation gap, combined with the dollar’s continued depreciation, presents a compelling case for investing in EM equities. Countries like Brazil, India, and South Korea, with undervalued currencies, stand to benefit immensely.
Commodity Winners in a Weak Dollar Environment
Commodities priced in U.S. dollars tend to gain value when the dollar weakens, as it requires more dollars to purchase the same quantity of resources. While oil and gold often dominate market headlines, 2025 has also seen a resurgence in undervalued commodities like silver, platinum, and copper.
Silver
Silver has surged nearly 25% in the first half of 2025, driven by its undervaluation relative to gold. The gold-silver ratio has widened to over 80, suggesting a potential price correction. Silver’s demand in green energy applications—such as solar panels and batteries—positions it as a strategic investment.
Platinum
Platinum has experienced a remarkable 50% increase in the same period, fueled by constrained supply and rising demand in hydrogen fuel cells and diesel catalytic converters. Unlike palladium, platinum’s versatility in decarbonization technologies makes it a long-term winner in the commodities market.
Copper
Copper has risen by 16.2% in the first half of 2025, driven by its critical role in the AI and electric vehicle (EV) revolutions. With data centers requiring approximately 27 metric tons of copper per megawatt of capacity, the demand for this metal is set to explode.
Strategic Entry Points for Investors
The weakening dollar and the TSX’s record close signal a significant shift in global capital flows. Here are some strategic ways to position your portfolio:
EM Equities
Consider allocating to ETFs like the iShares MSCI Emerging Markets ETF (EEM) or the Vanguard FTSE Emerging Markets ETF (VWO). These funds provide exposure to rapidly growing markets like India and Brazil, which are poised to benefit from dollar depreciation.
Commodities
For direct exposure to undervalued metals, look into silver and platinum ETFs such as the iShares Silver Trust (SLV) and Platinum Shares (PLTM). For copper, the Copper Miners ETF (COPX) offers a focused investment opportunity.
Currency Plays
Undervalued EM currencies, such as the Brazilian real (BRL) and South Korean won (KRW), can be accessed through currency ETFs like the WisdomTree Brazil Real Fund (BZRX) or the iShares MSCI South Korea ETF (EWS).
The Bottom Line
The record close of the TSX is not an isolated event; it reflects a broader global shift in economic dynamics. A weakening dollar is unlocking value in EM equities and commodities, creating a rare alignment of macroeconomic forces. Investors who act decisively can leverage this tailwind to outperform the increasingly tech-concentrated S&P 500.
Now is the time to rethink your investment strategy. The markets are signaling a clear message: it’s time to go global. By diversifying your portfolio and capitalizing on the dollar’s depreciation, you can position yourself for the next wave of growth.
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