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USD: Staying Bullish Into US November Elections; 5 Reasons – BofA

With the US election in November, what is the outlook for the US dollar?

Here is their view, courtesy of eFXdata:

Bank of America Global Research maintains a bullish bias on the USD, expecting a broad rally  to unfold into the November elections.  

We expect a USD rally to unfold into the November election and have recommended long exposure against the more cyclical, higher beta parts of the G10 FX spectrum vulnerable to more turbulent market conditions…,” BofA notes.  

Our broadly bullish medium-term USD view is predicated on  (1)  very low current levels of FX risk premium and a USD that has broadly undershot fundamentals in the context of high global uncertainty;  (2)  bullish calendar and event seasonals;  (3)  prospects for US data outperformance reflective of diverging US vs RoW virus infection trends;  (4)  short USD position liquidation potential; and  (5)  potential further loosening in global central bank monetary policy in response to recent unwanted FX appreciation,” BofA adds.  

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.