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Jul 16 - 12:55 PM

USD: Don’t Fear The CA Deficit - BofA

By eFXdata  —  Jul 16 - 10:45 AM

Bank of America Global Research discusses the impact of the US current account deficit on the USD outlook.

" The US current account (CA) deficit is unlikely to represent a material headwind for the US dollar over the medium term, despite prevailing negative sentiment to the contrary. A recently-wider deficit is a symptom of a strong and persistently-decoupling US economy, which we expect will be reflected in monetary policy decoupling beginning with the Fed's taper announcement in 2H, as our economists expect," BofA notes. 

"This would serve as a key catalyst for a sustained USD rise against lower beta currencies of central banks constrained in their ability to normalize policy, in our view," BofA adds. 

Source:
BofA Global Research

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