2026-02-04 07:06

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-a-bumpy-ride/

2026-02-03 12:02

Key takeaways In the FY26-27 Union Budget, the government guided towards a slower pace of fiscal consolidation, and continued its thrust on capex and slightly higher-than-expected borrowing. The Reserve Bank of India (RBI) is unlikely to cut interest rates at the upcoming Monetary Policy Committee (MPC) meeting on 6 February, given that inflation seems to be trending higher towards its target range. The Budget was largely mixed for Indian equities. Commitment to fiscal consolidation and the announcement of taxation of buybacks at the capital gains tax rate are structural drivers. The hike in the Securities Transaction Tax (STT) is likely to be a negative for equities. We favour domestically oriented sectors, including consumer discretionary, financials and industrials. Indian local currency bonds continue to offer attractive absolute and relative yields, as well as diversification benefits due to their lower correlation with global bonds. 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/union-budget-provides-a-supportive-backdrop-for-long-term-growth/

2026-02-02 12:02

Key takeaways The USD is the worst-performing G10 currency so far this year, closely followed by the CAD. Structural issues are likely to keep the USD under pressure over the near term, in our view. USD-CAD may drop with broad USD weakness, though trade uncertainty could drive it up. Year-to-date, the USD has been the weakest G10 currency, with the CAD close behind (Bloomberg, 29 January). While the CAD has strengthened against the USD − reflecting movements in the broader USD Index and a reduction in net short positions (Chart 1) − it remains the laggard within the G10 group (Chart 2). This is mainly due to uncertainty around US-Canada trade relations, especially the upcoming US-Mexico-Canada Agreement (USMCA) review. The Bank of Canada highlighted these concerns at its 28 January meeting, where the policy rate was kept at 2.25%, in line with expectations. Given these uncertainties, we maintain a cautious outlook for the CAD in 2026, despite robust domestic data that would usually support a stronger currency. Over the near term, USD-CAD could drop further, reflecting broad USD weakness, though trade uncertainty may present upward risk. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Turning to the USD, its near-term direction appears to be shaped more by structural concerns than by immediate monetary policy decisions. The Federal Reserve (Fed) kept interest rates unchanged at its 27-28 January meeting, with two members dissenting (see FX Viewpoint Flash – USD: Fed pauses; headwinds remain, 29 January 2026). Although markets still anticipate two 25bp rate cuts from the Fed this year, expectations for any easing at the next two meetings (17-18 March and 28-29 April) remain low (Bloomberg, 29 January). The USD is likely to remain under downward pressure over the near term, primarily due to structural factors, such as concerns about Fed independence, the possibility of abrupt shifts in US policy, and speculation around joint US-Japan FX intervention (FX Viewpoint Flash – JPY: Intervention speculation, 26 January 2026). Some market participants characterise this trend as “USD debasement” or a “de-dollarisation” trade − a view based on expectations of a long-term decline in the USD’s purchasing power, driven by unpredictable policy decisions, persistently large fiscal deficits, and growing US isolation (Bloomberg, 29 January). https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-and-cad-continued-underperformance/

2026-01-30 12:02

Key takeaways Geopolitical tensions have increased market volatility, with recent developments around Greenland and Iran adding to the complexity. However, we anticipate that any sell-off will be less severe than that of last April. Our investment strategy aims to capture the broadening opportunities driven by AI-led innovation while navigating geopolitical uncertainties through multi-asset diversification, including increased exposure to alternatives and gold. While we remain positive on global and US stocks and continue to position in Asia for geographical diversification, we have adjusted our equity allocation by upgrading Materials across regions and underweighting Europe ex-UK stocks after taking profits on European peripheral markets. UK Gilts have performed well since the Autumn Budget and benefit from favourable tailwinds, supporting our upgrade to overweight, and aligning with our investment grade credit positioning. We also upgrade Japanese government bonds to neutral following the recent sell-off. Asia’s growth drivers remain robust, underpinned by resilient domestic demand and strong AI-related exposure, along with solid upstream industrial activity. Fiscal stimulus, supportive monetary measures and investment boosts outlined in China’s 15th Five-Year Plan provide a positive backdrop for the equity market. Hong Kong benefits from an improving property market outlook and strong capital inflows. Japan’s expansionary policy and solid earnings growth, South Korea’s rising memory-chip cycle, and Singapore’s safe-haven appeal add to Asia’s allure for investors. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/diversifying-further-amid-evolving-geopolitical-risks/

2026-01-30 12:02

Key takeaways The FOMC left rates unchanged and did not shift its stance despite two dissenting votes. Fed Chair Powell stuck to previous data dependent guidance; our economists expect rates to remain steady. The USD is likely to face near-term pressure from structural concerns, rather than monetary policy changes. Following a series of 25bp rate reductions at the Federal Open Market Committee (FOMC) meetings in September, October, and December last year, the Committee voted by a margin of 10 to 2 to maintain the federal funds target range at 3.50- 3.75% during its 27-28 January meeting, in line with market expectations. The forward guidance portion of the policy statement was little changed. The two dissenting votes came from Fed Governors Stephen Miran and Christopher Waller, both of whom advocated for a further 25bp cut. Notably, Governor Miran, who had previously pushed for larger 50bp cuts, moderated his position, while Governor Michelle Bowman − who has previously indicated that rates have room to fall (The Wall Street Journal, 16 January) − did not dissent on this occasion. It is important to note that two dissenting votes fall well short of the consensus required for additional easing in future meetings. Fed Chair Jerome Powell emphasised that these dissenting views represented a minority, highlighting “broad support” within the FOMC − including non-voting members − for holding rates steady. The FOMC comprises 19 policymakers in total (12 voters and 7 non-voters), with voting rights rotating annually. For markets, Fed Chair Powell’s press conference offered the prospect of two main strands of inquiry – guidance around the likely policy path and Fed independence. On the latter, Chair Powell basically said he had nothing to say on the topic, leaving markets to interpret the policy guidance. The overall tone was relatively hawkish, with no indication of imminent further easing. Powell reiterated that no decisions had been made regarding future meetings, noting that the US economy is growing at a solid pace, the unemployment rate is broadly stable, and inflation remains somewhat elevated (Bloomberg, 29 January). He also noted that both upside risks to inflation and downside risks to employment had “diminished a bit”. This position allowed the USD to remain steady, supported by US Treasury Secretary Bessent’s earlier comments that the US “has a strong dollar policy”, and the Treasury is “absolutely not” intervening in the currency market (Bloomberg, 29 January). Fed Chair Powell’s remarks were consistent with a wait-and-see approach regarding future rate changes. Our economists’ view remains that the FOMC will keep rates steady through 2026 and 2027, though as always there will be important double-sided risks to this outlook to consider as the US economy evolves. Market expectations, however, also remain largely unchanged, with two additional rate cuts still anticipated later this year (Bloomberg, 29 January). In summary, we expect the USD to face ongoing downward pressure in the near term, driven primarily by structural concerns, such as questions around Fed independence and potential FX intervention to weaken the USD against the JPY, rather than the immediate trajectory of US monetary policy. While Fed Chair Powell did not address these structural issues in his latest remarks, they remain relevant for market sentiment. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-fed-pauses-headwinds-remain/

2026-01-29 12:01

Key takeaways As expected, the FOMC decided to keep the federal funds target range steady at 3.50-3.75% in January, following a sequence of rate cuts at the September, October and December policy meetings last year. While the Fed didn’t ease at this meeting, the 10-2 vote split, with two FOMC voters favouring a 0.25% rate cut, indicates a modest bias towards less restrictive rate policy within the Fed. Although the latest FOMC dot plot implies roughly one 0.25% cut in 2026 and another in 2027, we maintain our view that there will be no further rate cuts through 2026 and 2027, with double-sided risks to this outlook as the economy evolves. Chair Powell noted that the growth outlook has improved since the last FOMC meeting and reiterated that inflation remains above the Fed’s target, with tariffs likely to result in a one-time price increase. We continue to overweight investment grade credit, where we still see opportunities for investors to capture solid yields. For equity investors, robust economic growth and strong corporate earnings continue to be supportive. Combined with the ongoing tech revolution led by AI, this backdrop underpins our bullish view on global equities, with an overweight stance on US stocks. We expect the USD to remain under selling pressure in the coming weeks, mostly on structural concerns. 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/policy-on-hold-as-the-fed-signals-patience/