HSBC on negative interest rates - may be ignored by forex markets

HSBC research note on the impact of negative rates, saying the effect on economies is complex and the result therefore for FX is unclear.

Negative interest rates contribute to a breakdown in the relationship between rates and FX

• don't have a notably direct negative impact on FX
• may even mean that FX markets start to pay even less attention to rates, rather than worrying about them more

More:

• currencies weaken iwhen traders anticpate negative rates. but the impact lessens soon after they take effect
• little evidence of negative policy rates causing deposit outflows
• negative rates are not new
• market is focused on relative interest rate differentials