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Dollar seen strengthening modestly as US rate outlook holds up
HSBC cited firmer US rate expectations versus other economies, energy price resilience, and a reassessment of US fiscal risks as key near term supports for the dollar.
HSBC’s FX Viewpoint expects the broad US dollar to strengthen modestly in the near term, citing improving support from cyclical, political and structural factors, according to an FXStreet writeup.
The bank pointed to firm US rate expectations relative to other economies, resilience in energy prices, and a reassessment of US fiscal risks as drivers that favor the dollar versus major peers.
FXStreet notes AUD/USD was defending the 0.7000 level at the start of the week while trading near its lowest level since August 4, as a bullish dollar, multi year elevated US yields, and safe haven demand tied to the US-Iran standoff weighed on the pair ahead of Tuesday’s RBA policy announcements.