BoA says not landed scenario – Likes the USD and choppy FX markets likely to persist

BoA remarks via eFX.

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  • “We believe G10 economies remain in a non-landing scenario. Manufacturing PMI has been weak, but services PMI is so strong, that the global composite PMI is pointing to expansion. Labor markets remain hot, particularly in the US, where the weather-adjusted NFP reached an extreme level in March. China is recovering fast during reopening, with data surprises at a decade high,” BofA notes.

  • “The choppy FX path we have seen this year is likely to continue. As we have argued before, data tends to be volatile when inflation is high. We see renewed USD strength as more likely than further weakness in the short term, but still within the current range. We remain bearish USD in the medium-term to long-term, on valuation and assuming inflation will eventually move towards the target, but the timing remains uncertain. Moreover, stagflation risks could lead to more sustained USD strength,” BofA adds.

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