The single path to USD weakness is a narrow one – HSBC DollarIndex Growth Macroeconomics Fed Banks
When the global economy is slowing meaningfully, the USD strengthens
“‘Too tight’ or ‘too loose’ would be USD positive. The implications of a US slowdown for the USD hinge on whether thecan deliver the goldilocks outcome, not too tight, not too loose. The risk is that the US economy falls into recession either because this is what it takes to bring inflation under control, or because the Fed makes a policy error and over-tightens.”
“While there are many routes to a stronger USD, the single path to USD weakness is a narrow one. It requires an assumption that the US economy slows enough to temper Fed hikes but not so much as to induce a US recession, and that all of this happens while the rest of the world delivers better economic outcomes. It is not an impossible path, but we suspect it is not the most likely outcome.”Information on these pages contains forward-looking statements that involve risks and uncertainties.
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