Credit Suisse chief economist: We’re bearish on the US dollar

U.S. two-dollar billsPhoto by Leslie Shaffer

Credit Suisse is staying bearish on the U.S. dollar, despite its expectations the U.S. Federal Reserve will hike interest rates.

James Sweeney, chief economist at Credit Suisse said the house view was for four Fed hikes this year, including one at the meeting this week.

“This may seem to be very good for the dollar as the interest rate differential will rise with the rest of the world, but we’re actually bearish on the dollar against a wide range of currencies,” Sweeney said at the Credit Suisse Asian Investment Conference in Hong Kong on Monday.

He said that the market already expects U.S. interest rates to rise, but with “really good global growth,” the view on rates in other parts of the world, including Europe, will change.

That will affect the expected interest rate differential between the U.S. and the rest of the world, lessening the dollar’s attractiveness for investment fund flows.

“This is at a time when you’re seeing these deteriorating current account and trade balances in the U.S.,
Sweeney said, adding that the U.S. is also seeing elevated net international debt levels. “So we are bearish on the dollar against the euro, against the yen and against a number of emerging markets.”