U.S. Trade Policy May Influence Dollar More Than Monetary Policy

According to Odaily, economists from HSBC Global Research suggest that the trajectory of the U.S. dollar may be more influenced by changes in U.S. trade policy rather than monetary policy. In a recent report, they noted that the Federal Open Market Committee's (FOMC) stance in March was sufficiently neutral, not challenging the prevailing bearish sentiment towards the dollar, especially amid declining U.S. Treasury yields. However, they also indicated that this neutrality is not enough to trigger a sustained sell-off of the dollar. The economists highlighted that after a strong start for U.S. Treasuries this year, the Federal Reserve has maintained a cautious approach. This has led them to adopt a more conservative view on short-term yields, while keeping their forecast for the 10-year U.S. Treasury yield at 3.50% by the end of 2025 unchanged. Additionally, they pointed out the potential for further corrections in the U.S. stock market, as some indicators from the bank suggest oversold conditions.