USD rally to extend into 2024 – HSBC

The USD is likely to strengthen further in the months to come and into 2024, in the view of economists at HSBC.

No additional rate hikes, first rate cut in 3Q24

We expect the USD to strengthen in the months to come, notably against the EUR and GBP. Where the USD is priced for a sequence of rate cuts in 2024, both the EUR and GBP have relatively modest easing in mind. Relative policy expectations could shift in favour of the USD. In addition, cyclical support for the EUR and GBP is likely behind us, whereas the USD can capitalise on the resilience of its economy.

Our economists expect unchanged policy rates through mid-2024 and now see just 50 bps in rate cuts starting 3Q24.