HSBC expects most G10 currency pairs to consolidate in the near term, as global trade uncertainty continues to recede and cyclical dynamics begin to reassert themselves.
In a research note, the bank said further progress in trade negotiations could be supportive for the US dollar, even as structural concerns around the greenback persist. “The USD recovery may also have been helped by positioning adjustment,” HSBC added, noting that the dollar index (DXY) remains below levels implied by yield differentials—though that gap is narrowing.
The bank sees defensive currencies such as the Japanese yen and Swiss franc remaining under pressure, while commodity-linked currencies, including the Australian and New Zealand dollars, are likely to edge higher.
“With cyclical factors poised to regain traction, DXY consolidation seems likely, while AUD and NZD may strengthen over the near term,” HSBC said.
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This article was written by Eamonn Sheridan at www.forexlive.com.
