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Dec 16 - 12:55 PM

HSBC: Why the USD Is Unlikely to Weaken in 2025 as in 2017

By eFXdata  —  Dec 16 - 10:45 AM

Synopsis:

HSBC identifies two critical reasons why the USD is unlikely to weaken as it did in 2017, citing US yield dynamics and continued US economic resilience despite global growth challenges.

Key Points:

  • US Yields Dominate USD Movements:

    • The USD's recent strength has been more correlated with US yield movements than global equities.
    • The focus on yields explains why the USD has remained resilient even amid stronger global risk appetite.
  • US Exceptionalism Persists:

    • US economic outperformance continues to support the USD, as the Fed’s easing cycle is expected to remain shallow.
    • Other central banks are cutting rates faster, reinforcing USD strength against weaker currencies.

Conclusion:

HSBC sees limited scope for a 2017-style USD decline, as the currency’s drivers remain yield-focused and supported by US economic resilience, making a significant shift toward risk-driven depreciation unlikely.

Source:
HSBC Research/Market Commentary

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