HSBC analysts say the dollar is trading below levels implied by US rate
expectations. Although market pricing has shifted from expected cuts toward
potential hikes, the dollar’s response has been muted. HSBC cites still-easy US
financial conditions and markets pricing a resolution to the Middle East
conflict as factors weighing on the currency. The bank says the dollar needs
explicit monetary-policy support; if the Fed does not reinforce tightening bets
at next week’s meeting, the currency could “struggle”.