As the Fed nears the tip of its tightening cycle and interest fee volatility reduces, the USD has been grinding weaker. Waves of uncertainty stay, in particular all around the US debt ceiling and a resolution must gaze the tide shift in opposition to the USD anew, within the watch of economists at HSBC.
The ongoing US debt ceiling discussions would possibly perchance perchance well enhance volatility
“We nonetheless demand the USD to negate no, but we stay mindful of that you would perchance perchance perchance well factor in dangers, with primarily the most obvious prevailing source of disclose being the US debt ceiling. Certainly, the US debt ceiling is no longer a new disclose for the FX market to navigate.”
“To be determined, we must no longer expecting a technical default. Nevertheless the debt ceiling disclose has the aptitude to spark a immediate enhance in FX volatility. Increasing worry of ‘exhausting touchdown’ dangers and the subsequent rise in FX volatility would possibly perchance perchance well gaze the ‘real haven’ USD making an strive to rally, sooner than falling. That being mentioned, we assume the extra doubtless consequence is nonetheless undoubtedly one of a resolution. This would doubtless wait on FX volatility somewhat subdued whereas possibility sentiment improves, allowing the USD to weaken going forward.”
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