HSBC: US dollar fails to benefit from shift in interest rate expectations

Analysts at HSBC pointed out in a report that the dollar is currently below what market expectations for U.S. interest rates suggest. As market expectations have shifted from interest rate cuts to possible interest rates in the near future, the US dollar exchange rate's response has been relatively limited. They believe this may reflect the loose financial environment in the United States and market expectations that the conflict in the Middle East will be resolved. If the Fed fails to support interest rate hikes at next week's meeting, the dollar "could be in trouble."