In its latest client note, HSBC Holdings’ strategists David Bloom and Paul Mackel offered their outlook on US dollar and how it could impact the other currencies going forward.
Key Quotes:
“Mismatch between US rate differentials and a weaker USD is starting to reverse.
Fed looks like to be able to match its dot plots.
Other central banks in G-10 face challenges to begin or extend the tightening process.
Expects EUR/USD to fall to 1.15 in Q4 (previously saw 1.25).
Cites combination of delays by ECB to the gradual exit process.
And also an expectation that the US cyclical story will gain more traction.
Sees USD/CNY at 6.40 by Q4 (previously saw 6.20).
The upward revision is to factor in China’s narrowing interest advantage against the US.”
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