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FX Trends: With US Fed in focus, “risk on” vs “risk off”?

29 August 2024

Key takeaways

  • The USD decline looks overdone relative to US rates which, in turn, also seems overly dovish.
  • A paring back of Fed rate cut expectations should see the USD recover some lost ground …
  • … but the impact on other currencies may depend on whether this is viewed as a “risk on” or “risk off” development.

Our tactical view

Table of tactical views where a currency pair is referenced (e.g. USD/JPY):An up (⬆) / down (⬇) / sideways (➡) arrow indicates that the first currency quotedin the pair is expected by HSBC Global Research to appreciate/depreciate/track sideways against the second currency quoted over the coming weeks. For example, an up arrow against EUR/USD means that the EUR is expected to appreciate against the USD over the coming weeks. The arrows under the “current” represent our current views, while those under “previous” represent our views in the last month’s report.

Note: ^DXY = US Dollar Index, is an index (or measure) of the value of the USD against major global currencies, including the EUR, JPY, GBP,CAD, SEK and CHF. Source: HSBC

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