HSBC has lowered its forecasts for the US dollar amid increasing signs the Trump administration favours a weaker greenback.
The bank has reduced its estimates for the dollar compared to the beginning of the year against major currencies such as the euro, pound and yen.
HSBC sees the dollar trading at $1.25 against the euro by year-end versus $1.24 at present. It had previously forecast the euro to end 2018 at $1.20, a slight depreciation against the greenback following the single currency´s recent strong run.
It also believes the pound will likely end the year at $1.34 compared with its current rate of $1.41. The bank had previously expected sterling to end 2018 at $1.26.
HSBC expects the yen to fall to ¥105 against the Japanese currency versus ¥108 at present. Its earlier forecast predicted the yen to end the year at the current level.
US Treasury secretary Steven Mnuchin last week lauded the benefits of a weaker dollar for US trade, putting downward pressure on the greenback.
There´s also been rising worries over the trajectory of US policy and the prospect of a trade war.
Last week, the US unveiled import tariffs on solar panels and washing machines.
State of the Union
Investors are awaiting the State of the Union speech from President Trump on Tuesday for any further comments on the dollar.
However, investors are also wary that the dollar has already made big losses so far this year, raising the prospect of a near-term bounce.
“We are seeing a consolidation of the dollar’s losses and there is a whiff of nervousness among dollar bears out there,” said Viraj Patel, FX strategist at ING.
The dollar was down by 0.31% and 0.26% against the pound and euro respectively on Tuesday as at 1307 GMT.