。 1CURRENCIES ● GLOBALFebruary 2019USD: We are not for turning (pg 3)We remain USD bulls, despite a challenging start to the year for holding this view. US cyclicaldynamics are still relatively supportive, while they have continued to deteriorate elsewhere.Against the backdrop of slower global growth, we would not want to sell the USD. We alsobelieve it is a strange, and likely temporary phenomenon, that the USD has been largelyignoring the US data pulse. As the Fed was on autopilot in 2018, the data was somewhatirrelevant for the currency. Now the Fed has become data-dependent, so too should the USD.We believe this could be a catalyst for a breakout in many of the recently well-defined ranges inG10 currency pairs, especially for USD-crosses.GBP gets our vote (pg 11)Our forecasts for GBP reflect the shift in the possible paths for Brexit. The decision tree for GBPhas moved from “deal or no deal” to “deal or no deal or no Brexit”. An equally weighteddistribution of these three outcomes points to GBP-USD at 1.37, not 1.30 as previously forecast.Hedging with havens (pg 15)Last year we saw unusual cross-asset behaviour. This led many to ask if the characteristics ofhavens have changed. We would answer no, and went a step further to rank safe havens on across-asset basis. The champions are US Treasuries, JPY, and gold, in that order.AUD: The shock absorber (pg 17)More supportive policy out of the US and China has seen some of the external downside risksdissipate for the AUD. But this may be masking the growing domestic risk of a significant creditunwind and slower growth at home. The RBA has pivoted to neutral but still signals a high barto easing; the AUD is likely to anticipate rate cuts well in advance. Long-term forecasts (pg 20)Given the problems of forecasting out one year, many are understandably reluctant to venture aview for further out. However, we are aware that a number of our customers have a need forsome indication of the likely FX market direction over a longer-term horizon for planningpurposes. So, with some trepidation, we publish longer-term forecasts. Summary CURRENCIES ● GLOBALFebruary 20192Key eventsDate Event13 February RBNZ rate announcementRiksbank rate announcement20 February FOMC January meeting minutes5 March RBA rate announcement6 March7 MarchBoC rate announcementECB rate announcementSource: HSBC Central Bank policy rate forecasts (%) Last Q2 2019(f) Q4 2019(f)USD 2.25-2.50 2.25-2.50 2.50-2.75EUR 0.00/-0.40 0.00/-0.40 0.00/-0.40JPY -0.10 -0.10 -0.10GBP 0.75 0.75 0.75 Source: HSBC forecasts for Fed funds, Refi rate/Deposit rate, Overnight Call rate and Base rateConsensus forecasts for key currencies vs USD 3 months 12 monthsEUR 1.151 1.185JPY 110.7 108.7GBP 1.313 1.368CAD 1.316 1.296AUD 0.714 0.727NZD 0.665 0.671Source: Consensus Economics Foreign Exchange Forecasts January 20193CURRENCIES ● GLOBALFebruary 2019Not giving up on our USD bull fightWe remain USD bulls despite a challenging start to the year for holding this view. There havealready been four mini-cycles for USD sentiment in January alone. The very start of the yearsaw USD strength with heightened short-term volatility and the “flash crash” in various G10 FXpairs supporting the greenback. This then settled down into a period of USD weakness until themiddle of the month as fresh money appeared to come into high-beta FX, with EM fund flowsenjoying positive momentum, for example. The USD then staged something of a comebackbetween mid-to-late January, before turning weaker again following the dovish shift of the Fedat its 30 January policy meeting and Jerome Powell’s press conference. But while the overallbias has been for a softer USD, many of the long-held ranges in G10 FX remain intact.1. US data surprises have been resilient2. Eurozone data continues to disappoint-45 -40 -35 -30 -25 -20 -15 -10 -5 -45 -40 -35 -30 -25 -20 -15 -10 -5 Mar-17Aug-17Jan-18Jun-18Nov-18 US activity surprise index 5 10 15 20 25 30 35 40 45 50 55 5 10 15 20 25 30 35 40 45 50 55 Mar-17Jul-17Nov-17Mar-18Jul-18Nov-18 Eurozone activity surprise index Source: Bloomberg, HSBCSource: Bloomberg, HSBCWe accept that the tone of the Fed has changed, and the USD rightfully fell on the back of this.With the Fed delaying rate hikes, turning to a neutral, balanced outlook, and even suggesting aslower pace of balance sheet reduction, the broader cost of capital has declined. Therefore,rates of return in other economies look better relative to the US, leading to these currenciesrallying strongly against the USD. All other things being equal, this makes sense.But all other things are not equal – if anything, they are getting worse.USD: We are not for turning We retain a USD bullish stance despite a challenging January US cyclical dynamics are still relatively supportive while they havecontinued to deteriorate elsewhereUSD should respond more to upcoming US data surprises, with abreakout likely to the strong side for the USD from recent G10 ranges。。。。。。