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| HSBC Predicts Broad USD Decline in the Future |
Economists at HSBC predict that a broader decline in the USD is still the likely eventual outcome. While uncertainties are high, the long-held view of the broad USD decline will resume when a more positive environment is set.
The USD has been oscillating between risk appetite and rates, but HSBC believes that when the March Fed meeting is behind us and there are more signs of a better global growth inflation mix, it could set the stage for a more positive environment where the USD ultimately weakens. However, if financial contagion effects are much more adverse than anticipated, then the USD could strengthen as a "safe haven" currency. Nevertheless, HSBC views the more probable outcome is that financial stability risks will eventually be contained, resulting in a USD decline.
