Bank of America has warned that the US dollar could be in a tough summer after already falling sharply this year.
The dollar index that tracks the value of the US dollar against larger currencies has fallen almost 9% to 99.74 this year, when President Donald Trump’s customs war triggered a shift away from US assets.
Bank of America still expects data -driven drubbing during the summer. Weakness of the US dollar is largely seen as positive for dollar-denominated assets such as gold and bitcoin
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The global eg research team led by Athanasios Vamvakidis said in a report to clients on Friday that duty is more harmful to the US economy, as the country is dealing more with the rest of the world than perhaps any other nation.
The report recognized the recent resilience in the US economy and growth -supporting developments, such as President Donald Trump’s tax cuts and the abandonment of extreme cuts in tax expenses, but said “negatives dominate.”
“Police uncertainty on multiple fronts is back. Companies can pause employment and investment plans until there is greater clarity. In most scenarios, we see tariffs much higher than the starting point where the current levels are minimum,” the report said.
It added that the market reacts negatively to the detachment of fiscal policy at a time when debt levels are at record heights, leading to higher borrowing costs. Meanwhile, the Federal Reserve is unable to take significant action due to rising inflation expectations.
“Migration streams have collapsed. Demand rose in Q1 [front running] Prior to tariffs, but may be falling, ”noticed strategists, pointing to weakness in high-frequency indicators such as ISM data and weekly Dallas Fed Economic Index.
The Weekly Dallas Fed Economic Index has resumed the descendant after the short increase in early April and hit the lowest since December, according to data source trading.
“Such high -frequency indicators tend to be very noisy, but can still point to a slowdown of the economy in the coming months,” strategists said.
