Higher yields in US to support the US dollar in 2020 - HSBC

In an interview with Bloomberg TV on Thursday, David Bloom, HSBC’s Global Head of Foreign-Exchange Strategy, offered his outlook on currencies for this year, making a bullish case for the US dollar against its main competitors.

Key Quotes:

“Everyone’s convinced themselves the dollar’s going to be weaker.”

“It’s the third year in a row they’re going to fail. They got egg on their face last year, they got egg on their face the year before and now they’re going for the triple egg.”

When asked about New Zealand, he said: “This is what’s happening everywhere -- if you start offering me less than the mighty dollar offers me, your currency’s going down.” 

“The one currency we are very bullish against the dollar is sterling. The political risk was very negative for sterling, so we’ve taken one negative factor and we’ve chucked it away. That’s got to be good for the currency.”

 “When you’re looking for an alternative to that bad hotel, there’s one across the road. It’s called sterling. And we think it’s great.”

“Once those yields start compressing” even further than they have done already, “you’ve got kind of developed market yields but emerging-market risks.”

“After we see the great rally in EM and the race to the bottom of interest rates we could see at some point later this year, or maybe it’s next year, you could see suddenly your yields are just too low for the risks involved.”