HSBC Expects Us Dollar / Yen To Be 115 At The End Of The Year.

The US dollar rose sharply in 2015. What will happen this year? At least, HSBC is not optimistic.

HSBC said on Tuesday (March 1st) that the US dollar will weaken against the euro and the Japanese yen this year as the FED may slow down the tightening of monetary policy.

At the meeting last December, the Federal Reserve announced the first rate hike since June 2006.

In an interview, Daragh Maher, head of US foreign exchange strategy at HSBC, pointed out that investors expected the Fed's interest rate hike to be postponed and realized that the degree of easing that the European Central Bank (ECB) and the Bank of Japan (BOJ) could achieve and the extent to which the euro and yen could devalue were limited.

He believes that the Fed's tightening expectations have been reflected in the US dollar exchange rate.

Maher said that the Fed may begin to reduce the rate hike cycle at the next meeting in March 16th, and the next rate hike may be in June.

He believes that as long as the Fed sends a clear signal about the next move, the dollar is expected to respond.

Data from the US Commodity Futures Trading Commission (CFTC) released on Friday showed that foreign currency speculators slash the US dollar long bets for the ninth consecutive week, bringing net net positions to its lowest level in third weeks in May 2014.

In the week of February 23rd, the net stock value of US dollar was reduced to US $5 billion 750 million, which is a second week net multi position less than US $10 billion.

The net dollar in the week before was $8 billion 310 million.

The oil market and the stock market fell, and the Chinese economy slowed down, pushing the market back.

The timing of interest rate increase is forecasted.

This is bad for the US dollar, prompting investors to clear out most of the US dollar net positions.

This year, the US dollar index has fallen by about 0.6%.

Maher says, because of Europe.

(ECB) at next week's meeting, the expectation of massive easing will be lost, and the euro will go higher.

He said: "although the ECB may announce a reduction in the interest rate of the deposit mechanism and some restrictions on the purchase of bonds, if the purchase size of the monthly assets has not increased by about 20 billion euros,

It may be disappointing.

Maher said that in the second half of this year, the ECB may still be unable to fight against the strong euro.

HSBC expects the euro / dollar to be 1.20. at the end of 2016.

In February 11th, the euro / dollar hit 1.1375 of the highest level in October 21st, and the euro declined all the way.

In addition, Maher points out that because the market is aware that the Japanese central bank has a limit on the depreciation of the Japanese yen, the yen will rise against the US dollar. Nevertheless, the risk of Japanese central bank intervention in the market is still high, especially if the US dollar / yen is near the level of 111.

Even though the Bank of Japan carried out a negative interest rate policy at the end of 1, the yen gained momentum after a brief setback.

In the latest week, the net yen position increased to 52734 contracts, up from 47901 in the previous week.

This is a net high position since February 2012.

According to CFTC data, the euro clearance warehouse was 46857 contracts in February 23rd, the lowest since June 2014.

On Tuesday, New York's euro / dollar hit a month low of 1.0835.

Analysts say traders will sell more euros before the ECB March 10th policy meeting, and more stimulus measures are expected to be announced at this meeting.

But after recovering a month low, the euro recovered most of its lost territory. New York's stock market only dropped 0.08% by 1.0862..

Ihab Salib, head of Federated Investors international fixed income division, attributed it to a high expectation of more stimulus measures by the European Central Bank. Investors are worried that they may be disappointed.