6 days ago
Bank of America has warned that the U.S. dollar could beryllium successful for a unsmooth summer, having already dropped sharply this year.
The dollar index, which tracks the worth of the U.S. dollar against large currencies, has dropped astir 9% to 99.74 this year, arsenic President Donald Trump's tariff warfare triggered a shift distant from U.S. assets.
Bank of America expects continued data-driven drubbing implicit the Summer. Weakness successful the U.S. dollar is wide seen arsenic affirmative for dollar-denominated assets, specified arsenic golden and bitcoin BTC.
The planetary FX probe squad led by Athanasios Vamvakidis stated successful a study to clients Friday that tariffs are much detrimental to the U.S. system arsenic the state trades much with the remainder of the satellite than possibly immoderate different nation.
The study acknowledged caller resilience successful the U.S. system and growth-supportive developments, specified arsenic President Donald Trump's taxation cuts and the abandonment of utmost fiscal spending cuts, but stated that "negatives dominate."
"Policy uncertainty connected aggregate fronts remains. Companies whitethorn intermission hiring and concern plans until determination is greater clarity. In astir scenarios, we spot tariffs overmuch higher than the starting point, with existent levels being the minimum," the study said.
It added that the marketplace is reacting negatively to the loosening of fiscal argumentation astatine a clip erstwhile indebtedness levels are astatine grounds highs, starring to higher borrowing costs. Meanwhile, the Federal Reserve is incapable to instrumentality important enactment owed to rising ostentation expectations.
"Migration flows person collapsed. Demand accrued successful Q1 [front running] up of tariffs but whitethorn beryllium astir to fall," strategists noted, pointing to weakness successful high-frequency indicators specified arsenic the ISM information and play Dallas Fed economical index.
The play Dallas Fed economical scale has resumed the downtrend pursuing the little spike successful aboriginal April and deed the lowest since December, according to information root TradingView.
"Such high-frequency indicators thin to beryllium precise noisy but could inactive constituent to a slowdown of the system successful the coming months," strategists said.
English (US) 