Trump'S Expansionary Fiscal Policy Has Led To A Serious Overvaluation Of The US Dollar.

In the early morning of the European market, the US dollar index was at a high level and traded near the 103 pass.

Western holidays approaching, market liquidity decreasing, trading slack!

With hopes of Trump's fiscal policy next year, most market participants expect the dollar to rise further next year, but HSBC also has different views after UBS.

Herald Van Der Linde, head of HSBC equity strategy, said that although the US dollar is rising strongly and inflation will follow, the US stock market is also rising.

It also pointed out that because of the high expectations of the new government in the US next year, the United States has now poured large amounts of capital into it.

However, such momentum will not last long.

After Trump won the US election, the US dollar rose.

Last week, the Fed announced that it would raise interest rates three times next year - a faster rate than the previous two interest rate hikes, which has raised market expectations.

Herald Van Der Linde indicated that the US dollar rose.

Raising the risk of developing high risk investments in developing countries has contributed to a large influx of emerging market capital into the US market.

However, the rising trend of US dollar and US Treasury yields has ceased in late December.

Investors' expectations for us economic growth are already too high.

As the growth rate of US dollar and US bond yields slows down, a large amount of capital will return to emerging markets.

Just yesterday, Adrian Zuerche, Asia Pacific asset allocation director of UBS, said in an interview with CNBC that the US dollar was seriously overvalued and it was time for backhand to be short.

Adrian Zuerche received an exclusive interview with CNBC during the day, saying that the US dollar has been seriously overestimated, especially in the past few weeks. This rally is unreasonable and may be interrupted at any time. Now it is time for backhand to go short.

About Trump's fiscal policy: Zuerche says, if

If we really want to expand our fiscal expenditure, the US fiscal deficit is bound to deteriorate.

From a historical point of view, the expansion of the fiscal deficit is unfavorable to the strength of the currency, and it is estimated that the US dollar will face the pressure of depreciation.

On the Federal Reserve raising interest rate: Zuerche said that the current market has raised the Fed's two rate hike in the price, which is UBS's expectation for the fed to raise interest rates next year.

If the third increase does not happen, then that means the US dollar may not rise further.

The Fed estimates that four banks (not specifically specified) need to raise about $70 billion of unsecured debt and capital before the January 1, 2019 deadline, while the other four have reached the target.

Yellen, chairman of the Federal Reserve, said, "this requirement means that taxpayers will be better protected because big banks have to reserve funds for their own failures.

The aim is to prevent a repeat of the 08 year financial disaster by ensuring that large companies can absorb more losses, even after they fail. "

Yellen called it "one of the last key safeguards" after the financial crisis.

The Fed says many of the banks are in existence.

It will be classified into the category of debt that meets the requirements of the new regulation. This process is called grandfather exemption.

Grandfather's exemptions should greatly ease the pressure on banks to meet the new rules.

In addition to Wells Fargo, the banks that are expected to meet new regulatory requirements include JP Morgan chase, Bank of America, Citigroup, Dao Fu bank, New York Mellon bank, Morgan Stanley and Goldman Sachs.

Some of the largest branches of overseas banks in the United States must also meet the requirements of TLAC.

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