From Bank of America Merrill Lynch’s Ethan Harris:
Two ways to look at the dollar: In terms of economic behaviour, what matters is not the volatile daily index, but the monthly real trade-weighted index for all trading partners. That index is up 10.5% in the 12 months through March. Assuming the dollar renews its rebound, in line with our FX team’s forecast (e.g. Euro at parity by year-end), we estimate that the strong dollar will slice about 0.5% off of GDP growth this year.
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