US Dollar to grind lower – HSBC

Economists at HSBC see further modest USD weakness.

Sticky US inflation or a more marked deceleration in activity will likely see the USD rally 

The key for the USD will be whether inflation continues its descent toward target and whether this can be achieved without prompting a deeper economic downturn. 

If the US data supports this ‘Goldilocks’ scenario, which it mostly has done lately, then the grind lower in the USD could extend, especially if we see fewer data disappointments from outside the US. However, sticky US inflation or a more marked deceleration in activity will likely see the USD rally through rates and risk aversion.