Latest news with #anti-USD
Yahoo
6 days ago
- Business
- Yahoo
The Dollar's Collapse Party Might Be Ending -- HSBC Says the Real Bubble Is Forming Now
After an 8% slide in the Bloomberg Dollar Spot Index this year, investors seem convinced the dollar's pain is far from over. But HSBC (NYSE:HSBC) isn't buying the euphoria. In a fresh note to clients, Paul Mackel and his team flag signs of what they call a growing anti-USD bubblea mirror image of the bullish dollar wave seen just a few years ago. With traders extrapolating recent weakness into the future, HSBC believes sentiment may be tipping into crowd-think territory. Warning! GuruFocus has detected 6 Warning Sign with HSBC. The dollar's fall has been fueled by U.S. tariff drama, rising global de-dollarization talk, and general unease around Washington's policy direction under Trump. But HSBC notes that some of the initial catalystslike the shock from the April tariff announcementare now old news. What's more, historical correlations between the dollar and U.S. yields are starting to re-emerge, which could be an early sign that the dollar is bottoming out. Equities and yields are also moving in tandem again, hinting at a broader return to fundamentals. Still, the bears aren't out of ammo just yet. HSBC highlights scenarios that could keep the pressure on: more policy chaos, a faster-than-expected global rebound, or even leadership changes at the Fed. While none of these are base case assumptions, Mackel's team urges investors to stay alert. Bubbles don't last forever, they wrote. And if this really is an anti-dollar bubble, the unwinding could be just as sharp. This article first appeared on GuruFocus.
Business Times
14-07-2025
- Business
- Business Times
Dollar-selling is becoming a bubble, which may burst, HSBC says
[LONDON] Relentless US dollar-selling is starting to look like a bubble – and, like all bubbles, it will eventually pop, according to HSBC Holdings strategists. Traders appear to be fixated on the dollar's steep decline this year, and tempted to extrapolate that to future performance, HSBC strategists led by Paul Mackel wrote in a research note. That's symptomatic of 'bubbly-like' behaviour, they said. 'It was not long ago that a strong USD bubble was evident, but the opposite is occurring: an 'anti bubble' of sorts,' the strategists wrote. ''Bubbly-like' characteristics exist, which is a warning sign that a USD bottom may not be far away.' The Bloomberg Dollar Spot Index has tumbled more than 8 per cent this year as aggressive US tariffs and their chaotic rollout raised questions about the stability of the world's reserve currency. HSBC sees dollar softness continuing in the coming months, but arguments for more significant downside had become 'overly one-sided,' the strategists said. While uncertainty about US policies eroded the dollar's haven status and added to the 'de-dollarisation' theme, the degree to which they warrant further selling has diminished since President Donald Trump first announced wide-ranging tariffs in April, the strategists said. A return to a more conventional framework in which the dollar is correlated to US yields could signal that a bottom to the dollar's weakening trend is approaching, they said, adding that a similar correlation between US equities and yields was showing signs of picking up. On the other hand, the dollar decline could gather momentum if US policy uncertainty 'turns problematic once more' or the global economy begins to accelerate. While neither is the bank's base case, 'we need to be aware of the risks,' they said. Replacing Federal Reserve chairman Jerome Powell and the euro's outperformance could be possible triggers, they added. 'While we think through some downside scenarios to the USD, we must be cognisant of what could mark the end of the currency's decline,' Mackel and his team wrote. 'In our view, an 'anti-USD bubble' has been forming. Although it is not ready to pop, bubbles do eventually.' BLOOMBERG
