Bank of America believes the dollar has room to run
Bank of America Global Research discusses the USD outlook and maintains a core bullish view through year-end.
"The US economy is set to outperform by an historically-wide margin in 2021 and 2022, making this global recovery an exception to the "sell USD" pattern. We expect supportive capital flows - particularly direct investment - into USD on the back of wide growth and interest rate differentials," BofA notes.
"We expect USD appreciation concentrated against lower-beta FX, in particular EUR, where we see policy normalization as being compromised. We are constructive commodity currencies experiencing large terms-of-trade gain," BofA adds.
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