2026-03-03 07:03
Key takeaways Since the US Supreme Court struck down the IEEPA tariffs, FX movements have been fairly muted. Negative market sentiment appears less pronounced compared to last year. We expect the USD to drift lower and the EUR to edge higher in the weeks ahead. Since the US Supreme Court ruled against the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) for tariffs on 20 February, USD volatility has remained fairly muted (Chart 1). This was widely expected, given earlier signs of judicial scepticism. However, US policy uncertainty persists, especially with President Trump’s recent global tariff announcements, which could weigh on the USD and trigger market moves if major trade developments occur. That being said, the negative sentiment may not be as strong as it was after “Liberation Day” last year. US President Trump’s State of the Union (SOTU) address on 24 February, while lengthy (a record 1 hour and 47 minutes), introduced few new policy measures. He called the Supreme Court’s decision “unfortunate” and “disappointing”, yet claimed it gives him more power to impose tariffs (Bloomberg, 24 February). Despite these uncertainties, we are not expecting a sharp decline in the USD over the near term. Heightened geopolitical risks could, in fact, support the USD through the unwinding of short positions. The Federal Reserve (Fed) is unlikely to cut rates at its March or April meetings, a view shared by both markets and our economists, though unexpected economic data could influence future policy. Source: Bloomberg, HSBC Source: Bloomberg, HSBC EUR-USD has held steady despite ongoing EU-US trade uncertainty. The EU is likely to postpone ratification of the trade agreement as legislators seek further clarity on US trade policy (Bloomberg, 24 February). With EUR-USD trading above interest rate differentials (Chart 2), most US policy risk seems priced in. Over the near term, we expect EUR-USD to move towards the upper end of its current range, though significant new highs are unlikely. In the Eurozone, fiscal expansion and production recovery offer some upside, but a strong EUR rally would require robust wage growth or a clear credit cycle. The European Central Bank’s (ECB) influence remains limited, with no rate changes expected in 2026 (Bloomberg, 24 February). https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-tariff-uncertainty-resurfaces/
2026-03-03 07:03
Key takeaways The recent market sell-off was triggered by concerns that incumbent software companies could be replaced by AI start-ups. We believe these fears are exaggerated, as these companies are also well positioned to benefit from AI for greater efficiency. The investor rotation from IT to other sectors broadens opportunities in industrials, materials and utilities. A multi-asset solution will help diversify across asset classes, sectors, markets and currencies. While the US Supreme Court limited the use of IEEPA, the administration quickly responded with a 15% global tariff using Section 122. Import-reliant sectors may benefit from lower near-term cost pressures and reduced legal uncertainty. Overall, resilient US growth, solid earnings and continued AI momentum support our bullish view on US equities, while total tariff revenue is expected to remain stable in 2026, which is also positive for bonds. We favour US investment grade credit over high yield. We assess the potential market impact under different scenarios in the Middle East. Continued strikes across several countries would increase oil and gold prices, while putting pressure on European economies, emerging-market oil importers and cyclical sectors. Conversely, these market segments would benefit if tensions ease. Although gold prices may decline in this scenario, gold is expected to remain a key diversifier. Solid earnings growth across sectors and regions supports our market optimism. Outside the US, Asia sees the most positive earnings revisions. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/positive-outlook-remains-amid-tech-sell-off-and-new-tariffs/
2026-03-02 12:01
Key takeaways The PBoC will remove the 20% reserve on USD-CNY forward contracts, starting from 2 March… …this change is intended to moderate, not reverse, RMB appreciation, in our view. The RMB is likely to strengthen further against the USD, while the PBoC could relax more measures. On 27 February, the People’s Bank of China (PBoC) announced that it would reduce the risk reserve requirement for onshore USD-CNY forward contracts from 20% to 0% from 2 March. This measure, which was reinstated on 28 September 2022 to curb RMB depreciation expectations as USD-CNY surpassed 7.00, has now been unwound. We view this adjustment not as an attempt to halt or reverse RMB appreciation, but rather to moderate its pace. Since the Lunar New Year holiday, USD-CNY fixing rates have reached new multi-year lows, and the RMB has strengthened notably against the USD. The China Foreign Exchange Trade System (CFETS) RMB Index also rose further, indicating the RMB has been strengthening against a basket of currencies. Meanwhile, the spread between the fixing and the spot rates has widened (see the chart below). Recent cross-border flows indicate that onshore corporates and investors have been selling USD at a record pace, resulting in unprecedented net short USD-CNY forward positions. In this context, the PBoC’s decision to remove the risk reserve requirement appears justified. Source: Bloomberg, HSBC Our outlook remains that USD-RMB could decline further as we approach key events. The National People’s Congress on 5 March is likely to focus on domestic priorities, such as industrial upgrading, technological self-reliance, growth rebalancing, and RMB internationalisation − all supportive of a stronger currency. Additionally, US President Trump’s scheduled visit to China from 31 March to 2 April signals ongoing stability in trade relations between the two countries. Looking ahead, the PBoC may continue to relax some of the previous policy measures. Historically, the removal of the risk reserve in October 2020 was followed by further adjustments, including changes to macro-prudential assessment (MPA) parameters in late 2020 and early 2021, as well as two reserve requirement ratio hikes on FX deposits in 2021. However, these actions did not reverse the RMB’s appreciation trend against the USD at that time. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/rmb-managing-the-tempo/
2026-02-25 12:01
Key takeaways Table of tactical views where a currency pair is referenced (e.g. USD/JPY):An up (⬆) / down (⬇) / sideways (➡) arrow indicates that the first currency quotedin the pair is expected by HSBC Global Research to appreciate/depreciate/track sideways against the second currency quoted over the coming weeks. For example, an up arrow against EUR/USD means that the EUR is expected to appreciate against the USD over the coming weeks. The arrows under the “current” represent our current views, while those under “previous” represent our views in the last month’s report. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-trends/g10-currencies-us-tariff-ruling/
2026-02-23 08:04
Key takeaways There’s been plenty of talk about China’s anti-involution campaign, but so far tangible progress remains limited. The authorities are committed to this agenda but must balance it with other priorities like keeping the labour market stable. Industrial consolidation is still at an early stage: green transition, merger and acquisition activity will contribute; fair competition is key. China data review (Jan 2026) China’s first inflation print in 2026 shows a mixed performance. CPI growth slowed to 0.2% y-o-y in January amidst a high base from last year, given distortions from the Chinese New Year (January 2025 versus February 2026). This suggests a rosier CPI figure ahead in February. Meanwhile, PPI dropped 1.4% y-o-y, but strong non-ferrous metals prices and the ongoing anti-involution campaign helped cushion the fall, with the rate of decline easing to its slowest pace since August 2024. China’s January NBS PMI print suggests some renewed pressure as both the manufacturing (49.3) and non-manufacturing (49.4) gauges fell back to contractionary territory after a temporary reprieve in December 2025. A key drag on the manufacturing front stemmed from new orders, which dropped to 49.2. Although recent local GDP targets indicate that China may adopt a more cautious stance for this year’s national GDP goal, this NBS reading again highlights that proactive fiscal policy and “moderately loose” monetary policy are needed to help boost domestic demand. China’s January credit data showed an economy that remained on a relatively weak footing as real demand stayed muted. Total Social Financing came in at RMB7.2trn in January, up 8.2% y-o-y, driven by government support, but new bank lending stayed muted at RMB4.7trn. Accelerated government bond issuance will help to kickstart projects, given that this year is the first of the 15th Five Year Plan. Household and business confidence still need more support to transmit into a broader improvement in investment this year. China anti-involution push – Stepping up a gear China’s anti-involution campaign was launched in July 2025 to much fanfare and was aimed at combating the intense “race-to-the-bottom” price wars and supporting sustainable industry growth. It initially worked with producer price inflation turning positive in sequential terms from October, led by a few sectors like aluminium, copper, and coking coal. To date though, guidance has been largely advisory rather than compulsory, and included voluntary production cuts by industry associations, regulatory reforms, such as amendments to the anti-unfair competition law, and National Development and Reform Commission (NDRC) meetings on the criteria for disorderly price competition. However, in the absence of robust monitoring and enforcement mechanisms, progress in industrial consolidation and enhancements to profit margins remain limited. The 15th FYP shows the government’s commitment The anti-involution campaign is far more than just a slogan; Chinese authorities are working towards a unified national market and promoting fair competition. This strategic focus is highlighted in the draft of the 15th Five-Year Plan, which stresses the urgent need to curb “involutionary competition” and rebalance the economy. Indeed, involution frequently manifests as ‘predatory’ pricing that undercuts competitors with unsustainably low prices. To address this, we expect the government to step up endorsing and enforcing competition law principles and implement further measures to restore market order, while simultaneously balancing other policy objectives, including labour market stability and sustained economic growth. Next steps The 15th Five-Year Plan stresses the need to increase domestic consumption as a proportion of GDP, necessitating policy measures that foster sustainable consumer demand growth. Presently, the most significant deflationary pressure originates from the Producer Price Index (PPI). Source: CEIC, HSBC Source: CEIC, HSBC Meanwhile, supply-side reductions are underway, and these can be complemented by targeted demand-side initiatives, particularly those with a strong pull effect on upstream sectors. For instance, infrastructure investment focused on improving human well-being and quality of life, such as better intra- and inter-regional connectivity, and expanding social housing, can effectively reflate the economy. Source: LSEG Eikon * Past performance is not an indication of future returns Source: LSEG Eikon. As of 11 February 2026 market close https://www.hsbc.com.my/wealth/insights/market-outlook/china-in-focus/china-anti-involution-push-stepping-up-a-gear/
2026-02-23 08:04
Key takeaways The US Supreme Court ruled 6–3 that President Trump couldn't use the International Emergency Economic Powers Act (IEEPA) of 1977, but the administration will continue tariff policy under alternative statutory powers. Using section 122, a new 10% global tariff was announced on Friday but already changed to 15% on Saturday. This comes on top of existing measures and will remain in place for up to 150 days. The financial market reaction was muted but constructive so far, particularly in import-reliant sectors such as retail, consumer discretionary, autos, and select industrials, reflecting lower near-term cost pressures and reduced legal uncertainty. For fixed income and FX, the effects are more nuanced. Lower effective import taxes may ease goods inflation at the margin over time, providing modest support for bonds, while reduced trade tension offers limited near-term support to risk sentiment. USD could be slightly weaker on positive global sentiment. Please refer to the full report for details about the event and our investment view. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/our-thoughts-on-the-us-supreme-court-ruling-and-market-implications/
