This Regime Change Is Just Back To The Old Normal; Markets Need To Get Used To It – BofAML

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Volatility is certainly higher in all markets. Is this just the old normal? Here is the view from Bank of America Merri

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch Research discusses the current volatile market conditions and notes that this week gave us further evidence that 2018 is not 2017, and that the sharp increase in market volatility this week is the adjustment from a lowflation to a normal inflation environment.

“Inflation does not have to be high. As long as it is not low, central banks are behind the curve and need to tighten. This is a wakeup call for markets. It is also a realization that central banks will not come to the rescue every time markets are in turmoil. This is the old normal, but markets need to get used to it again.

Still, we believe that inflation divergence will lead to more sustained FX trends in the months ahead....

This suggest to us upside risks for USD and GBP against EUR and CHF. The outlook is more complicated for JPY, given its sensitivity to market volatility, but our baseline is bearish for the months ahead,” BofAML argues. 

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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