Deutsche Bank: If the Federal Reserve shifts to shrinking 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 raising interest rates 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, yet the yen remains at a historic low. Tightening the balance sheet may lead to policy conflicts with the US President Trump's administration, as the US President Trump's administration has clearly indicated its desire to keep long-term Treasury yields at low levels. Japan's Finance Minister Katsuyuki Katayama has discussed using domestic savings to support the Japanese bond market.