US Dollar: Gradual upside after hawkish Fed hike – HSBC
HSBC’s FX Viewpoint notes that the Federal Reserve’s unanimous 25bp hike and hawkish guidance have reinforced support for the Dollar. The bank highlights that the dots imply at least one more hike in 2026 and potential tightening in 2027, while still below market pricing.
HSBC's FX Viewpoint highlights that the Federal Reserve's unanimous 25 basis point hike and hawkish outlook have bolstered the Dollar's position. The bank predicts at least one more rate increase in 2026 and potential tightening in 2027, despite these measures falling short of market expectations. HSBC remains moderately bullish on the USD, anticipating gradual and data-driven gains, as other G10 central banks adopt a more hawkish stance.
The decision's reinforcement of the Committee's tightening bias has led to the USD strengthening, though the move was anticipated. The median 2026 "dot" implies one additional hike before year-end, with a significant minority of participants still expecting another rate rise in 2027. This more hawkish approach is below current market pricing, so a significant shift in rate expectations or the USD is not expected.
Instead, market focus will likely be on whether incoming data validate the final projected increase this year.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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