Gold prices just lower; monthly gains on track
Investing.com - Bank of America strategists are recommending investors express bearish dollar views against the Swiss franc rather than the euro this week, according to a new research note released Monday.
The bank’s Currency and Rates Strategy (CARS) model entered what it terms a "macro shock regime" last week, triggered by falling U.S. Treasury yields. This shift in market conditions would typically favor the Swiss franc over the euro when trading against the dollar.
BofA analysts noted that while the U.S. dollar’s price movements versus both the euro and Swiss franc have been highly correlated throughout 2023, recent developments suggest a potential divergence. The Swiss franc has weakened more significantly than the euro in recent weeks, which the bank attributes to "idiosyncratically high US tariffs rate" affecting Switzerland.
The bank believes this tariff-related pressure on the Swiss franc could have room to "de-escalate," potentially creating a more favorable environment for the currency against the dollar compared to the euro. This view aligns with their broader bearish outlook on the U.S. dollar.
BofA strategists cautioned that the primary risk to their bearish dollar view would be a potential near-term rally in the U.S. currency, particularly if upcoming Institute for Supply Management (ISM) services data proves stronger than expected.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.