Zhongjin: From a medium to long-term perspective, the weakening of the US dollar as a "currency anchor" may continue to dominate the market outlook, and the trend of dollar depreciation remains unchanged.

The China International Capital Corporation pointed out that after the short-term factors that boosted the US dollar fade, the narrative of global currency order restructuring and the weakening of US dollar hegemony may once again dominate market direction: the continuous accumulation of US external net liabilities has strengthened its demand for a weaker dollar; the high uncertainty of Trump's policies has not eased the risk of "weaponizing" the dollar, also reducing demand for US assets in the market. If the "balance sheet reduction" policy advocated by the new Federal Reserve Chairman Powell can be implemented, it would objectively help repair the credibility of the US dollar. However, Powell's policy is constrained by the resilience of the real economy and financial markets, as well as political constraints, and Trump's foreign, trade, and economic policies continue to negatively impact the credibility of the US dollar. Taking into account the overall impact of Powell and Trump's policies, it cannot be concluded that the credibility of the US dollar will improve in the future. CICC expects that the global currency order may continue to be restructured, driving the US dollar to maintain a long-term depreciation trend.