HSBC: US Policy Shift May Drive Dollar Movements This Week

According to a report by Jinse Finance, Paul Mackel, Global Head of FX Research at HSBC, stated that changes in U.S. policy, along with the upcoming inflation data release, are likely to set the tone for the U.S. dollar this week. The year-on-year increase in the June CPI is expected to rise slightly compared to May. "The dollar is beginning to show signs of responding to data in a more conventional manner, so if the data is weak, it could become a stumbling block for the dollar." In addition, announcements regarding potential tariffs on certain countries (namely Brazil, Canada, the European Union, and Mexico) and targeted products (such as pharmaceuticals and copper) will keep uncertainty elevated. While these announcements may provide short-term support for the dollar, other policy risks also need to be considered, such as recent criticism of Federal Reserve Chair Powell over the cost of headquarters renovations.