货币展望：美元来日方长

1、By: HSBC FX StrategyCurrenciesGlobalAugust 2020 HYPERLINK / Currency Outlook USD: Plenty of life in the old dog yetThe USD is under pressure, and the bears are in the ascendancy. However, we do notbelieve this weakness will persist and in these tumultuous times we find little reason to turn bearish

2、on the USD.Many of the “nowcasts” for USD weakness are simply extrapolations of recent trends rather than forecasts. Many of these will wane. We remain positive on the USDs outlook against the EUR and GBP.Also in this report:Long-term forecastsData Matters: Alternative Data MattersPlay video with Do

3、minic BunningDisclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.SummaryUSD: Plenty of life in the old dog yet(pg 3)The dollar is under pressure and the bears are suddenly i

4、n the ascendancy. However, we do not believe this weakness will persist and in these tumultuous times we find little reason to turn bearish on the USD. Many of the “nowcasts” for USD weakness are simply extrapolations of recent trends rather than forecasts. Many of these will wane. We remain positiv

5、e on the USDs outlook against the EUR and GBP.Long-term forecasts(pg 16)Given the problems of forecasting out one year, many are understandably reluctant to venture a view for further out. However, we are aware that a number of our clients have a need for some indication of the likely FX market dire

6、ction over a longer-term horizon for planning purposes.So, with some trepidation, we publish longer-term forecasts until 2026.Data Matters: Alternative data matters(pg 18)Financial markets have remained extremely resilient in recent months despite the global pandemic ravaging economic activity. We a

7、nalyse multi-asset performances in light of both conventional and alternative data, which has grown in importance since the beginning of the COVID-19 pandemic.Key eventsDateEvent17-20 AugustUS Democratic national convention19 AugustFed minutes for July meeting24-27 AugustUS Republican national conve

8、ntion27-28 AugustKansas City Fed annual Economic Policy Symposium1 SeptemberRBA rate announcement10 SeptemberECB rate announcementSource: HSBCCentral Bank policy rate forecasts (%)LastQ4 2020(f)Q2 2021(f)USD0.00-0.250.00-0.250.00-0.25EUR0.00/-0.500.00/-0.500.00/-0.50JPY-0.10-0.10-0.10GBP0

9、Source: HSBC forecasts for Fed funds, Refi rate/Deposit rate, Overnight Call rate and Base rateConsensus forecasts for key currencies vs USD3 months12 monthsEUR1.1581.176JPY105.6105.2GBP1.2781.307CAD1.3451.326AUD0.7040.720NZD0.6540.670Source: Consensus Economics Foreign Exchange Forecasts August 202

10、0USD:Plenty of life in the old dog yetThe USD is under pressure, especially against the EUR, but we do not expect this momentum to persistExplanations of recent USD weakness are “nowcasts”, not forecasts; many of these forces are likely to waneOur G10 forecasts are unchanged in the face of recent vo

11、latilityThe dollar is under pressure. The bears, who were slowly coming back out of the woodwork after years of predicting the imminent decline in the dollar, are suddenly in the ascendancy. Although the momentum in the USD has moved against our expectations for certain pairs most notably EUR and GB

12、P we do not believe this will persist.In these tumultuous times, it is easy to get spooked by price action and momentum. But when we look at what has changed fundamentally in the last month and would make us reconsider our outlook, we find little reason to turn bearish on the USD. As forecasters, ch

13、asing price action does not add any value.We look at two sets of arguments explaining why the USD has weakened and potentially could weaken further:The “nowcasts” which are not forecasts: These are explanations for recent USD depreciation that are simply extrapolated as a forecast. One example is th

14、at US growth could underperform others during a global recovery from COVID-19 induced recessions; another is the impact of US real yields on the dollar; a third is the scale of FX reaction to the Next Generation EU fund. In our view, many of these factors are not compelling arguments for further USD

15、 weakness.Factors that could drive future USD weakness if they materialise: These are developments that could become more prominent in the months ahead and, if they do, would likely drive more USD weakness. They include a shift from Risk On Risk Off (RORO) to Dollar On Dollar Off (DODO) behaviour; a

16、nother example is the potential for the US election to shift the outlook for US assets, particularly equities, in a negative manner.Ultimately, we do not find any of these arguments strong enough to make us change our view and understanding of FX markets. In this economic environment, we continue to

17、 believe currencies with fiscal flexibility are best placed to recover faster than those with more stretched debt dynamics. We still see the AUD, NOK, NZD and SEK holding on to recent gains and even strengthening further in the next year. But we remain positive on the USDs outlook against the EUR, G

18、BP and CAD where fiscal frailties might become more of a challenge in the months ahead.Our strong USD view has served us well for the last two years and continues to hold up particularly well against EM FX this year. However, the main bellwether currency, the EUR, has raced away from our forecasts.

19、The world may be full of fake news but in markets, price is truth.The question we have had to ask ourselves is whether the price action and momentum should prompt a change in some of our forecasts. Our EUR-USD projection, which has been 1.10 for nearly two years, looks a long way offside, as does ou

20、r view of GBP-USD finishing the year at1.20. However, we are choosing to hold firm right now.Holding onOne reason we are happy to hold on to our EUR and GBP forecasts, despite the recent momentum, is that these are tumultuous times. The S&P dropped 1000 points before rallying by a similar amount in

21、the space of a few months; consensus GDP growth forecasts for the US and Eurozone started the year at 1.9% and 1.0% and now stand at -5.3% and -8.1%, respectively, showing just how volatile expectations are. There is an unusually high degree of uncertainty in the economic, political and market backd

22、rop, suggesting momentum could easily swing back in favour of the USD just as quickly as it turned against it.We also do not see much that has fundamentally changed outside the price action and a diminishing of near-term European political risk premium. We are not convinced there has been a catalyst

23、 that shifts much of our fundamental analysis of the USD or broader currency markets. Momentum is certainly against us, the flow appears to be against us, and the “nowcast” is against us. But momentum can turn quickly.We continue to contend that this is not a secular decline in the USD (see USD: Rep

24、orts of its death are greatly exaggerated, 1 July 2020). According to our recent survey, the most compelling argument for the USD decline is cyclical. The consensus supports that view in 2021, looking for GDP growth to pick up in the Eurozone by 5.9% and only 4.0% in the US a rare potential occurren

25、ce of European growth outperformance. Equally important has been the shift in narrative around Eurozone debt mutualisation and the much minimised risk of Eurozone break-up following the announcement and agreement of the Next Generation EU fund. But many of the arguments put forward to explain recent

26、 USD weakness are either not that compelling or will struggle to drive further depreciation, in our view.We are still expecting a relatively slow global economic recovery, with downside risks, and in such a world, we would expect fiscal policy flexibility to support currency strength. This bodes wel

27、l for the AUD, NZD, NOK and SEK, as we outlined in our June Currency Outlook. That said, we do not shy away from discussion about why the USD is weakening and whether this will persist. We look at these ideas below, splitting them into two groups: the drivers that do not convince us, and those argum

28、ents that we see as more compelling.The “nowcasts” not the forecastsFirst, we will explore three arguments which appear to explain why the USD is weak right now, but which do little to inform us of where the USD will be by the end of the year.Slow US growth versus the global “V”Negative US real rate

29、s and their impact on the dollarNext Generation EU fund and a resurgent EURWe see these explanations as “nowcasts”. Those calling for a weaker USD on these grounds are extrapolating from the current market mood, even when such inferences seem like post hoc rationalisations, rather than forecasts for

30、 likely conditions in the future. We believe many of these forces seem unlikely to drive future USD weakness, even if they are prevalent right now.Slow US growth versus the global “V”The most obvious rationale for recent USD weakness is that we are at the start of a global economic rebound following

31、 COVID-19 induced shutdowns and weakness. If there is a clear, global V-shaped recovery, the USD will weaken. We accept this point, as we discussed the different potential shapes of a recovery in “LUV! is all you need” (27 April 2020). In this case, USD weakness would be exacerbated if the scale of

32、rebound in the rest of the world were much stronger than the USs recovery. In our recent USD survey, most respondents thought that cyclical drivers would be the most likely cause of a potential USD bear market (see USD Survey, 14 July 2020). So it is clear that this line of thinking is influencing i

33、nvestor behaviour and FX markets, and may well be responsible for current USD softness.The challenge we have is that it is not clear to what extent this recovery and particularly US underperformance is happening. Of course, some indicators in a number of economies around the world are showing a heal

34、thy rebound in activity after catastrophic declines. However, even with a strong rebound in monthly terms, actual output looks set to remain below pre-crisis levels for some time in many sectors, such as industrial output (Chart 1).Moreover, beneath the headlines, some of the underlying data is stil

35、l worrying. Many measures of unemployment for example remain elevated, and there are significant risks that as and when various stimulus measures roll off, then the pace of the economic rebound could easily falter. The headline PMIs have rebounded but employment components look weak, for example (Ch

36、art 2). This might make it harder for signs of a V, as seen in the retail sector, to persist in the months ahead.Output remains well below 2019 even after healthy rebounds in growth ratesEmployment may be an issue once government support schemes stop110105100959085807570UKGermanyUSJan 2015=100Indust

37、rial Production110105100959085807570Index 55Composite PMI Employment Component50454035JanuaryJuneIndex5550454035Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20USJNEZUKSource: Bloomberg, HSBCSource: Refinitiv Datastream, HSBCIt is also not clear that the US is underperforming economically. Charts 3 and 4 s

38、how the US ISM and Eurozone PMI indices for services and manufacturing. The USs decline was smaller on these survey measures, and the rebound has been to higher levels, suggesting stronger growth in the US. Q2 GDP data backed this up. US GDP fell an incredible 32.9% q/q annualised. But the Eurozone

39、saw an annualised decline of close to 40%. Even if we are over the worst, and a global recovery causes the USD to underperform higher-beta currencies like AUD and NOK, it is not clear why the USD should weaken versus a large, closed economy like the EUR, when European growth is still so weak and the

40、 US is outperforming the Eurozone.Slowdown looks less severe in the US with a stronger recovery.Services showing the same pictureUS ISM manuf.EZ PMI manuf.6565706060605555505050404545404030353520303010US ISM non-manuf.EZ PMI services70605040302010Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20Jan-10 Jan-1

41、2 Jan-14 Jan-16 Jan-18 Jan-20Source: Bloomberg, HSBCSource: Bloomberg, HSBCTaking a longer-term view of growth still does not make it clear why the USD should be weakening quite so much, particularly given the vast uncertainty around growth projections.Chart 5 shows the median forecast from Consensu

42、s Economics for GDP growth for the US, Eurozone, UK, Japan and China for 2020 and 2021, and the range of the forecasts going into that consensus median. The US is expected to have a much smaller fall in 2020 than the Eurozone or the UK, for example. And while 2021s rebound is seen as smaller for the

43、 US than many others, what really strikes us is the vast uncertainty across all the economies for growth over the next two years. In normal times, we might expect a forecast range of 1-2ppt for most economies. In the US for 2020 the range is around 4ppt, with a range of nearly 6ppt in 2021.Economic

44、outlook for the next two years even more uncertain than usual% YrConsensus ForecastBars show range of GDP estimates 121086420-2-4-6-8-10-12-14% Yr 121086420-2-4-6-8-10-12-14US 2020forecastEZ 2020forecastUK 2020forecastJN 2020forecastCN 2020forecastUS 2021forecastEZ 2021forecastUK 2021forecastJN 2021

45、forecastCN 2021forecastSource: Consensus Economics, HSBCIt also seems somewhat odd to focus on potential USD underperformance when, looking through the noise, the consensus still sees US output staying relatively elevated over the next two years compared to other G10 economies. Chart 6 shows the exp

46、ected level of output in 2020 and 2021 compared to an end-2019 baseline and we can see that the US is still tracking above the likes of the Eurozone, the UK and Japan.US output expected to be higher relative to its 2019 level than other economiesUSEZUKJNConsensus GDP Forecast, Dec 19 = 1001009998979

47、6959493929190Dec-19Dec-20Dec-21Source: Consensus Economics, HSBC10099989796959493929190Those arguing for ongoing USD weakness right now, based on a worse economic recovery by the US in 2021 (not even in 2020), are taking a firm conviction view on a topic that has enormous error bands around it compa

48、red to normal forecast uncertainty.Many current economic forecasts are predicated at least to some extent on what happens with the path of COVID-19 infections and government responses to those. There is absolutely no certainty on how this will evolve, with the headlines showing a shifting focal poin

49、t for this on a weekly or even daily basis. June and early July saw the US in the limelight as cases rose across the South and West in particular, and the market was engulfed by USD bearishness.This is a perfect example of a “nowcast”: using the latest coronavirus case count to extrapolate a trend f

50、or EUR-USD for the next year. The danger for the nowcasters is that the focus is already shifting to case numbers and lockdowns in Asia and Europe, as Hong Kong enters a potential “third wave”, and the UK and Germany warn about travel to Spain due to the increasing case load there. Meanwhile, Austra

51、lia has announced a shutdown in the state ofVictoria, which accounts for around a quarter of its national GDP, after a sudden spike in cases, and New Zealand has also announced its first new cases in months and therefore has reintroduced various containment measures.We have no idea about how the vir

52、us will evolve and how governments will respond. Ultimately this makes economic forecasts even more uncertain than ever, as evidenced by the range of forecasts above. To hold a firm conviction about a weaker USD based on the likely growth path when there is such uncertainty about that path right now

53、 seems a stretch at best, in our view. We find it hard to believe that the aggressive and seemingly certain negative USD price action can be built on a firm view of economic performance over the next 18 months.Get real real yields hurting the USD?Maybe it is not expectations of strong global growth

54、fuelling USD weakness, but that the economic downturn has driven a massive liquidity surge from the Fed, pushing US yields much lower and causing the USD to weaken. Even if the global data worsens further, it may not be good for the USD because it will just incite further Fed easing and balance shee

55、t expansion, and thus cause dollar depreciation. We have already addressed part of this thinking in “USD: Reports of its death are greatly exaggerated” (1 July 2020). In short, it is not obvious that the Fed is any more dovish than other most developed market central banks. Indeed, when we scale by

56、GDP, the balance sheets of the ECB and BoE are set to overtake the Fed in the coming months (Chart 7).The follow up to this is that Fed easing has caused a massive fall in both nominal and real yields and that the latter is causing the USD to weaken. We see a number of flaws in the logic when thinki

57、ng about the forecast for the USD for the rest of the year. For a start, lets not forget that real yields are deeply negative and falling elsewhere, albeit not at the same pace as seen in the US (Chart 8). The UK real yield picture looks dreadful and yet GBP rallied almost as aggressively as everyth

58、ing else against the USD in July. This makes us wonder how strong a driver real yields really are in G10 FX markets.Even if we assume that low real yields have driven the USD lower recently and there is some modest evidence of this in the data for this year then to project an even weaker USD from he

59、re would require projecting even deeper negative real yields. This is another example of a “nowcast” not a forecast. Associating lower real yields with a weaker USD right now tells us little about the path for the USD in the months ahead. So let us consider how US yields could fall even further and

60、faster than other economies in the months ahead.CB balance sheet expansions should see ECB and BoE outpace the FedCentral Bank asset purchases (% GDP)Real yields negative and falling in many economiesLatest (%, LHS)YTD change (bp, RHS)USProjection UKEZ45%40%35%30%25%20%15%Jul-19Jan-20Jul-20Jan-2145%