BoA/ML highlight risk of USD intervention
A client note from Bank of America / Merrill Lynch say that there is a rising risk of intervention from the US to combat a strong US dollar.
Trump administration would couch such intervention in terms of USD stabilisation.
BoA add that this intervention is not their base expectation
- Says USD is overvalued, real effective exchange rate around 13% above long-term average
- If easing from the Federal Reserve does not lower the USD, nor jawboning, the next step risk is 'formal currency intervention'
- 'the risks are rising'