BofA: USD optimism amid soft landing hopes for the US economy

<p>Bank of America (BofA) provides its perspective on
the current state of the U.S. economy, the renewed optimism surrounding
it, and the implications for the U.S. dollar.</p><p>Key Takeaways</p><ol><li>Soft Landing Optimism:
<ul><li>As Q3 begins, there's a surge in optimism about the U.S. economy
achieving a "soft landing." This means slowing down without entering a
recession, mainly driven by recent CPI data which suggests inflation
might not be as enduring as initially thought.</li></ul></li><li>Impact on the USD:
<ul><li>The newfound optimism and the potential for less aggressive action
from the Fed have triggered a decline in the U.S. dollar (USD) at the
start of H2. However, BofA maintains a bullish outlook on the USD.</li></ul></li><li>Cautious Approach:
<ul><li>Despite the overall positive sentiment, BofA advises caution. They
are skeptical about the rapid rate of disinflation and the evolving
policy responses to tackle inflation.</li></ul></li><li>USD in H2:
<ul><li>While acknowledging that the USD might be overvalued, BofA anticipates its appreciation in the latter half of the year.</li></ul></li></ol><p>Summary</p><p>Bank of America sees a buoyant mood surrounding the U.S. economy's
prospects, as market participants hope for a smooth deceleration without
a prolonged slump. This sentiment, coupled with recent favorable
inflation data, has placed downward pressure on the U.S. dollar in the
early days of the second half of the year. However, BofA recommends a
cautious approach, questioning the pace of disinflation and the policy
actions taken to combat inflation. Despite the prevailing narrative,
BofA is bullish on the USD for the remaining half of 2023.</p><p>For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1689961959653000&amp;usg=AOvVaw3djggZ9A07ynzB43AGyWER">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1689961959653000&amp;usg=AOvVaw3djggZ9A07ynzB43AGyWER">Get it here</a>.</p>

This article was written by Adam Button at www.forexlive.com.