Deutsche Bank: If the Federal Reserve turns to reducing its balance sheet, the US dollar may weaken

Deutsche Bank analyst George Saravelos pointed out that if the Federal Reserve shifts its policy focus from interest rate hikes to tightening monetary policy by reducing its balance sheet, the US dollar may weaken. George Saravelos stated that the Bank of Japan is recovering liquidity through quantitative tightening at a record pace, but the yen remains at historic lows. Tightening the balance sheet may conflict with the policy of the US President Trump's government, because the US President Trump's government has made it clear that it wants to maintain the long-term treasury bond yield at a low level. Japanese Finance Minister Takayuki Katayama has discussed using domestic savings to support the Japanese bond market.