BAC’s $1.68B Volume Ranks 41st as Dollar Weakness Fuels Fed Cut Bets Euro Rises

Bank of America (BAC) surged 2.90% to $47.50 on August 12, with a trading volume of $1.68 billion, ranking 41st in daily liquidity. The move aligns with broader dollar weakness as markets priced in a higher probability of Federal Reserve rate cuts amid soft inflation data and labor market concerns.

Bank of America strategists highlighted stagflation risks and a potential Fed pivot as key headwinds for the dollar, advocating for a long EUR/USD position. They cited July nonfarm payrolls and ISM services data as reinforcing bearish USD sentiment, with the euro’s policy flexibility contrasting against U.S. fiscal pressures. The bank emphasized that even if inflation remains sticky, easing cycles are inevitable, with risks of faster or deeper cuts if growth weakens further.

Recent U.S. CPI figures, showing a 0.2% monthly increase, reinforced expectations for a September rate cut. A weaker dollar lifted the euro by 0.4% to $1.1666, while the yen and other higher-yielding currencies benefited. The Fed’s potential leadership change and dovish signals from officials like James Bullard further underscored dollar fragility. However, risks remain, including upside inflation surprises or stronger U.S. labor data ahead of the September FOMC meeting.

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