Deutsche Bank Warns Dollar Weakens If Fed Prioritizes QT Over Hiking

Deutsche Bank analyst warns USD may weaken if Fed shifts focus to QT, citing Japan's yen weakness despite rapid balance sheet reduction and potential policy clashes.

Woofun AI reports that Deutsche Bank analyst George Saravelos stated the US dollar could weaken if the Federal Reserve prioritizes quantitative tightening over interest rate hikes to tighten monetary policy. He cited Japan as a precedent, noting the yen remains at historic lows despite the Bank of Japan withdrawing liquidity at record speeds through QT, even with slow rate hikes. Saravelos also highlighted potential policy conflicts with the Trump administration, which aims to keep long-term Treasury yields low, while noting market attention on the Bank of Japan's independence and Finance Minister Satsuki Katayama's proposal to use domestic savings to support the bond market.