(Bloomberg) -- The greenback’s strength will prove resilient even as the Federal Reserve begins to lower interest rates later this year, says Daragh Maher at HSBC Securities USA Inc.
The firm’s head of research Americas sees the dollar ending 2025 around where it stands now, he said in an interview Thursday. That’s because HSBC expects the US economy to continue to outperform global peers, and Treasuries’ yield advantage to persist even if the Fed does move to cut borrowing costs by year-end as expected.
He spoke after a government report showed US inflation cooled last month, sending Treasury yields and the greenback lower as traders bet the central bank will ease at least twice this year.
“This exceptionalism theme, it still feels like it has got its arms around the dollar,” Maher said. “The greater unknown is — can the rest of the world catch up?”
He predicts the ICE US Dollar Index, or DXY as it’s known, will end 2025 at the 105 mark, compared with about 104.5 now. Maher also expects modest upside for the greenback against the euro and pound in the months to come.
The DXY was down about 0.6% on Thursday, on track for its biggest drop in roughly a month. The decline pared the index’s 2024 advance to around 2%. The greenback has drawn support from the Fed’s higher-for-longer message on rates as other central banks began easing policy.
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