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Feb 11 - 10:55 AM

USD: US Decoupling And USD Upside Ahead - BofA

By eFXdata  —  Feb 11 - 09:50 AM

Bank of America Global Research's economists expect a strong and out-of-consensus US decoupling from the Eurozone economy. 

"We expect US growth at 6% this year and 4.5% next year, compared with consensus forecasts of 4.1% and 3.5% respectively. Similarly, we see US inflation at 2.6% this year and at 2.2% next year, compared with consensus forecasts of 2.2% and 2.1% respectively. In the Eurozone, we expect growth of 2.9% and 3.4% in 2021 and 2022 respectively, and inflation at 0.7% and 1%,' BofA notes. 

"The key reasons for this US decoupling from the Eurozone include more US fiscal stimulus and slow EU vaccination (see also below). If anything, we see upside risks in our US forecast, depending on the total size of fiscal stimulus in the US, and downside risks in our Eurozone forecast if vaccination does not accelerate soon. Although the correlation of the USD with growth differentials has not always been strong, such an extreme decoupling does point towards USD strength," BofA adds. 

Source:
BofA Global Research

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