The U.S. Federal Reserve is widely expected to deliver a rate cut on Wednesday, but HSBC warns the dollar could actually see a short-lived bounce on the decision. The bank argues there is now a high bar for the Fed to out-dove market expectations, with traders already pricing in roughly 140 basis points of easing through end-2026.
Unless policymakers signal a much faster pace of cuts, HSBC sees scope for the greenback to squeeze higher in the immediate aftermath of the announcement. However, any such gains are likely to prove temporary. The note highlights that prospects of accelerated easing remain firmly on the table, particularly if U.S. labour data continues to soften.
This article was written by Eamonn Sheridan at investinglive.com.