HSBC economists do not expect the dollar to be significantly affected by the Fed’s rate cuts planned for 2024.
Moderate USD Strength Ahead
Our view of modest USD strength in 2024 is not based on a predicted calamity, either for the US economy or others. As such, the impact of Fed easing on the USD falls into the realm of uncertainty, rather than that of a USD bullish haven.
If rate cuts occur in parallel with slowing US inflation, US real interest rates are likely to remain positive, which would provide support for the dollar.
Shallow cuts could help the US economy regain momentum and keep the dollar supported.
Source: Fx Street
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