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Oct 09 - 12:55 PM

G10: Global Economy To Weaken In Q4; Where To Target EUR/USD & USD/JPY - BofA

By eFXdata  —  Oct 09 - 10:45 AM

Bank of America Global Research discusses its expectations for the global economy into year-end.

"We expect the global economy to weaken in 4Q. The strong rebound in 3Q was temporary, driven by base effects from the 2Q lockdown. We have actually been surprised the market reacted so positively to the strong 3Q data. Indeed, global data have already started weakening, as the base effects are behind. We expect reintroduction of COVID-19 measures in most countries, and particularly in Europe, will also contribute to a weak 4Q. We note the US economy continues to perform better than most of the rest of G10," BofA notes.

"Based on the above, we see further USD and JPY strength in 4QWe forecast EURUSD at 1.14 and USDJPY at 103. These forecasts looked aggressive during the summer, but we believe are reasonable following the market correction in September. If anything, the risks may be for more USD strength. Technicals remain bullish USD for October," BofA adds. 

BofA Global Research


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