【英文】汇丰银行报告：全球外汇展望：美元牛市压力测试Currency Outlook：Stress testing the USD bull（50P）

One of our core reasons for being USD bulls since April 2018 has been the cyclical divergence  that has been increasingly apparent between the US and the rest of the world, in particular  Europe. After a strong 2017, the Eurozone economy started to falter in Q1 2018, and by early  Q2 it was clear that a downtrend was underway in activity data. In contrast, this was the very  moment that President Trump’s fiscal stimulus started to kick in and drive a much stronger  growth profile in the US relative to the rest of the world (Charts 2 and 3). This led to a significant  shift in rate hike expectations in the US, with the Fed actually over delivering through the course  of 2018 with four rate hikes. Although the growth divergence is expected to narrow, the US still  looks set to lead from the front from a cyclical perspective in HSBC’s growth forecasts. 

Right now, this does not look likely. Charts 4 and 5 show the historical budget deficits for a  range of developed market economies, and China as well as HSBC’s forecasts for the coming  year. The direction of travel is clear. Most authorities have been running ever tighter fiscal  stances since the global financial crisis. By contrast, our economists expect the widening of the  US deficit to continue. Meanwhile, the shift to stimulus in China in 2016 is not set to be pushed  further based on our economists’ numbers. So for the time being, we do not believe that the  fiscal lever will be pulled to such a degree that it would cause a change in fortunes for the USD.

And even if other policy makers were to go down this route, there is a growing risk that it will be  too little, too late. We would normally expect a combination of looser fiscal policy and tighter  monetary policy to be currency supportive, as happened for the USD. But the last few years  have shown how the relationship between these variables has changed (see FX Special: New  thinking for fiscal loosening, (30 July 2019). Many G10 economies – but most notably the  Eurozone – have seen growth slow to such a degree and inflation expectations fall so far that  fiscal stimulus might not necessarily lead to a response of tighter monetary policy. It may be that  fiscal loosening only acts as a substitute for monetary loosening (Charts 6 and 7).