HSBC: Outlook for US dollar in holiday season inspires confidence

According to economists at HSBC, the US dollar will rise amid the holiday season. However, they warn investors that the dollar could lose ground next year.

Economists expect the US dollar to reverse direction and lose value in the medium term. However, they still believe that the recent plummet was overdone. A stronger correction in the dollar may be seen at the end of 2022. 

They will be closely watching the rate projections for year-end 2023 at the December 13-14 Federal Open Market Committee (FOMC) meeting. If the interest rate peaks above 5.00%, the greenback could grow, given that the majority anticipate hitting the peak interest rate of 4,60%. At the same time, risk appetite is still the main tool that helps investors make decisions in the foreign exchange market.

In their view, the lower-than-expected US consumer price index seen on December 13 could also contribute to depreciating the dollar.