HSBC has warned that the US dollar could become the most prominent source of pressure on global markets in the second half of the year.
He explained that the continued strength of the US currency could pose significant challenges for investors.
Especially if the markets reprice their expectations on monetary policy in the US.
The bank expected the U.S. dollar to continue to make gradual gains until the first half of 2027.
He also suggested that the pace of the rally could accelerate if the Fed hints at further tightening of monetary policy, or if geopolitical tensions return to the forefront.
The report stressed that the Fed’s recent meeting refocused on inflation risks.
This prompted investors to revise their expectations on interest rates.
As a result, the dollar has extended gains against most major currencies over the past two weeks.
The strength of the US dollar was clearly reflected in global markets.
The Japanese yen fell to its lowest level since 1986, raising expectations that Japanese authorities could intervene in the exchange market to support its currency.
The U.S. dollar hit a level of 162 yen before settling near 162 yen in the latest trading.
In contrast, the euro came under considerable pressure, falling to about one point by thirteen and ninety-nine dollars.
The pound fell to around one comma thirty-two dollars.
The U.S. dollar index, which measures the greenback’s performance against a basket of major currencies, rose to around 101 points, 32 points.
It continued to record quarterly gains reflecting continued demand for the dollar amid global economic uncertainty.
Analysts believe that the path of the US dollar will remain a key factor in determining the direction of the markets in the coming months.
Investors await any new decisions from the Federal Reserve on interest rates.
Read also:
