USD/CNH: BofA’s Caution, JPM’s Warnings

  • Bank of America and JPMorgan Chase present complementary perspectives on the current economic environment, focusing on different areas of concern.

Bank of America (BofA) has expressed caution about betting against the US dollar in the face of recent improvements in sentiment towards China’s economic policy stimulus. Recent policy actions by China have sparked optimism, leading to a weakening of the USD. However, BofA advises against making hasty financial moves based on these developments alone. 

BofA believes that the effectiveness of Chinese Economic policies in stimulating significant new economic activity remains uncertain. Investors are encouraged to wait for more definitive signs of a sustained recovery in China’s credit and property sectors before making significant currency moves. 

Just last month, BofA expressed a bearish outlook on several Asian currencies, including the Chinese yuan, South Korean won, Taiwan dollar, Thai baht, and Vietnamese dong. BofA anticipated sustained depreciation pressures on the yuan into the second half of the year due to several factors particularly due to the delayed easing by the Federal Reserve. 

On the other side, Jamie Dimon, the CEO of JPMorgan Chase, has been continuing his warnings at the JPMorgan Global China Summit in Shanghai. Dimon suggested that the chance of stagflation in the US—a period of stagnant economic growth combined with high inflation—is higher than most people think. Last week, he did not rule out the possibility of a hard landing for the US economy. 

Import the BlackBull Markets Economic Calendar to iCloud, Google, or Outlook to get alerts direct to your inbox, enabling you to plan your positions in advance. 


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