CICC: In the medium to long term, the weakening of the dollar as a "currency anchor" may continue to dominate market prospects, and the trend of dollar depreciation remains unchanged

CICC pointed out that after the short-term factors boosting the dollar fade, the narrative of global monetary order reconstruction and the weakening of dollar hegemony may re-dominate market direction: the continuous accumulation of the United States' net external liabilities gives it a stronger demand for dollar depreciation; the high uncertainty of Trump's policies has not alleviated the risk of "weaponizing" the dollar, which also suppresses market demand for U.S. assets. If the "balance sheet reduction" policy advocated by the new Federal Reserve Chairman Waller can be implemented, it would objectively help restore the credibility of the dollar. However, Waller's policies are constrained by the capacity of the real economy and financial markets, as well as political factors, and Trump's foreign, trade, and economic policies continue to have a negative impact on the credibility of the dollar. Considering the overall impact of Waller's and Trump's policies, no conclusion can be drawn that the credibility of the dollar will improve in the future. CICC expects that the global monetary order may continue to be reconstructed, driving the dollar to maintain a long-term depreciation trend