Fed likely to move just once more, dollar seen gaining ground: Standard Chartered

Steven Englander, Managing Director and Global Head of G10 Forex Research & MD-N American Macro Strategy, Standard Chartered Bank,
expects one more rate cut of 25 basis point from the US Federal Reserve, followed by a long pause.

“We still think they’re going to cut 25 because we think that the numbers will support it, but we’re also not expecting to see much from the Fed next year,” he said.

Amid a technology-led sell-off on Wall Street, Englander said that concerns around artificial intelligence (AI) stock valuations have unsettled markets, but the underlying US economic picture may still support a stronger dollar.

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On the currency front, he described a “battle” for the dollar, with the AI sell-off weighing on sentiment, while firmer comments from Fed officials have helped the currency regain some ground. Standard Chartered expects rising productivity and steady profits to draw capital into the US. “Ultimately, we see a stronger dollar and thinking of the euro going down to say 112, certainly below 115 in the course of the next year,” Englander projected.

Discussing how investors may diversify away from the concentrated AI trade, he said the direction of capital flows is still “up in the air.” Investors would like to see broader performance in sectors that use technology, which could support both US equities and the dollar. But he noted that most will wait for a few more quarters of solid productivity and profit growth before making large shifts.

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On the India-US trade deal, Englander said he remains confident both sides will find a solution, citing economic and geopolitical reasons to avoid a trade dispute. “The last 100 yards seem to be taking a long time, but ultimately, I think there will be some resolution,” he said.

For the full interview, watch the accompanying video

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