Fidelity, JPMorgan Buck Market by Betting on Stronger Dollar

The dollar will surprise by getting stronger next year as the US economy outperforms, according to some of the world’s biggest money managers.

Fidelity International, JPMorgan Chase & Co., and HSBC Holdings Plc are going against the consensus by warning of dollar strength, while Loomis Sayles & Co. says a global economic slowdown will see traders flock to the world’s reserve currency.

The handful of contrarian views are based on expectations that the rest of the world will struggle more with higher interest rates than the US and lurch closer to a recession. While the Federal Reserve has indicated it plans to cut interest rates by 75 basis points in 2024, dollar bulls expect similar or even quicker reductions in other major economies from Europe to emerging markets, leading to wider rate differentials.

“It is peculiar that the consensus thinks the US dollar will be the loser in 2024,” said Paul Mackel, global head of FX research at HSBC. “A number of scenarios point to dollar resilience but only a global soft landing delivers a clear dollar bear case.”

A weaker dollar in 2024 is the majority view among analysts surveyed by Bloomberg across the Group-of-10 nations and emerging markets. All but one currency in the Dollar Index and the broader Bloomberg Dollar Spot Index, which includes EM, is expected to gain.

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