HSBC has revised its view on the USD, predicting more upside for the greenback going into 2024. Previously, the bank had forecasted a winding down of cyclical weakness in European currencies, but this has materialized faster than anticipated. HSBC cites looming tightening by major central banks and resilient U.S. economic data as contributing factors to a stronger USD.
Key Points:
• Revised Stance: HSBC shifts its view to anticipate more strength in the USD through to 2024.
• European Weakness: Cyclical weaknesses in European currencies have ended sooner than expected, contributing to a bullish outlook for the USD.
• Central Bank Actions: Tightening policies from major central banks worldwide are likely to increasingly impact currencies, further supporting the USD's strong position.
• Resilient US Data: Despite signs that the narrative of 'US exceptionalism' may be waning, HSBC argues that this won't necessarily be a headwind for the USD, particularly given the broader implications for global growth.
• Interest Rates: Even though U.S. yields are expected to fall, the bank suggests that further rate cuts could be discounted more in other economies, thereby supporting the USD.
This summary is via the folks at eFX.
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