CICC Says U.S. Dollar Index May Return to a Weaker Trading Range

CICC said the U.S. dollar index may move back into a weaker trading range after the latest market adjustment. According to Jin10, a CICC research note said markets have been in a continuous adjustment since June. It said the U.S. dollar index rose and broke above the upper bound of its trading range over the past year, while global capital market indices that are more influenced by AI-related momentum and U.S. dollar liquidity generally pulled back. The note added that U.S. equities also saw a style rotation, with more defensive sectors gaining the upper hand. CICC said the main drivers of these adjustments were the buildup of interest-rate-hike expectations and a marginal tightening in U.S. dollar liquidity. Reiterating its earlier view, CICC said the Federal Reserve could be “hawkish in name but dovish in practice” within the year. It also said what may materialize from Kevin Warsh this year is more likely deregulation of the banking sector, aimed at sustaining the investment cycle’s momentum and buying time to improve economic efficiency through AI implementation. CICC said the market may shift to trading a “lagging curve” after this round of adjustments. It added that physical assets, industrial sectors, and technology still have expansion potential, and that investors can also watch for the impact of financial deregulation in supporting traditional cyclical sectors.