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Jul 29 - 10:55 AM

USD: Why Bad News Is Still Good For The USD? - BofA

By eFXdata  —  Jul 29 - 09:30 AM

Bank of America Global Research discusses the USD outlook and maintains a bullish bias over the coming weeks.

"Bad news is still good for the USD because the Fed remains predominantly focused on inflation and getting the policy rate to somewhat restrictive levels. We have argued that bad news will be bad for the USD only once the Fed shifts from inflation autopilot to growth data dependence. While Powell's press conference this week referenced data dependence and elicited a dovish market reaction, the Fed's reaction function is still heavily weighted toward inflation," BofA notes. 

"In this sense, the Fed is likely to continue hiking at least until the policy rate is slightly restrictive (>3.0%) before attaching greater weight to activity weakness. This may happen after the September policy meeting but until then the USD is likely to remain strong in our view," BofA adds. 

BofA Global Research


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