A broader USD decline is still the likely eventual outcome – HSBC

The broad USD has been oscillating between risk appetite and rates. When the stage for a more positive environment is set, long-held view of the broad USD decline would then resume, economists at HSBC report.

Uncertainties are high

“If the financial contagion effects are much more adverse than we anticipate, then the USD should strengthen as a ‘safe haven’ currency. However, in our view, the more probable outcome is that these financial stability risks will eventually be contained.”

“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.”