BCA Raises US Dollar Target to 105 Amid Widening Real-Rate Gap

BCA Research, a leading financial services firm, has upgraded its forecast for the US dollar, predicting it will reach 105 over the next three months. This increase is driven by the widening real-rate gap in favor of the Greenback and resilient domestic data.

The report highlights that global industrial cycle, powered by AI-driven capital expenditure, is running at its strongest pace since 2021. The US economy is best positioned to capture the next leg of growth, widening the growth gap with other G10 countries. Global data center construction is set to top $1 trillion next year, with the US pipeline exceeding the rest of the world combined.

Unlike European and Asian peers, the US economy is better insulated against high energy costs and elevated interest rates. This growth differential is expected to keep market expectations for additional Federal Reserve policy tightening intact. Markets are pricing in heavier central bank rate hikes outside the US than is justified by their weaker underlying demand.