BofA remains skeptical about the US dollar's medium-term growth prospects. However, the bank sees a chance for temporary gains of the currency in summer. The report highlights signals pointing to a potential trend reversal.
No change of the indicator value may reduce the volatility of the related markets.
A decrease of the indicator value may contribute to the fall in quotes of USD.
The options market shows investor expectations for currency movements. Right now, signals suggest fading confidence in further dollar weakness. Some companies are buying up euro put options that will appreciate if the euro weakens, to hedge against a potential decline in the European currency.
BofA remains skeptical about the US dollar's medium-term growth prospects. However, the bank sees a chance for temporary gains of the currency in summer. The report highlights signals pointing to a potential trend reversal.
The Trump administration has unveiled plans to increase import duties on goods from China and other nations. Analysts interviewed by Bloomberg caution that the move will drive up US consumer prices as businesses shift higher costs onto shoppers.
US Fed Governor Christopher Waller suggests cutting interest rates in July. He argued this move is needed to support the economy as the labor market shows signs of cooling.
On Thursday, the US dollar strengthened and headed for a second week of gains, supported by positive data on retail sales and initial jobless claims. These indicators pointed to the resilience of the American economy, despite concerns over President Trump's tariff policies.
In June, US retail sales, not adjusted for inflation, showed a solid 0.6% increase after declines in the previous two months, according to data from the US Commerce Department. This exceeded almost all estimates given in a Bloomberg survey of economists.
A decrease of the indicator value may contribute to the fall in quotes of USD.
An increase of the indicator value may contribute to the rise in quotes of USD.
The dollar is the monetary unit of the United States (US). It is also used as the official currency by some other countries (Ecuador, Zimbabwe, El Salvador). The dollar holds a leading position in the world economy.
At the moment, the dollar dominates the system of international settlements with almost 50% share (the euro ranks second with less than 25%). Meanwhile, the dollar's dominance is even more pronounced in the financial sector, on the foreign exchange market, and in the government reserves.
The US currency (USD) quotes, as well as those of its foreign counterparts, depend primarily on the economic and political situation in the issuing country. The US authorities, such as the Federal Reserve System (the Fed) and the Department of the Treasury, influence the dollar exchange rate by changing their monetary, fiscal, budget, and tax policies.
Moreover, the value of the dollar may be significantly affected by the latest news and the international situation. Global economic problems and rising geopolitical tensions have historically been favorable for the US currency, as investors consider it one of the major safe-haven assets, along with gold. In contrast, during periods of strong economic growth and a relatively calm global environment, the demand for the dollar tend to reduce.
