BCA Research's MacroQuant model is flagging a weaker outlook for the U.S. dollar and a stronger stance on several commodities, according to the firm's latest assessment. The quantitative asset-allocation and market-timing framework remains modestly bearish on the dollar after having anticipated recent drops in the U.S. dollar index.
The model's dollar assessment rests on a combination of negative price momentum and valuation considerations. While recent depreciation has moved the currency closer to what the model views as fair value, BCA cautions that the dollar "is still expensive." The firm also highlights that faster earnings growth outside the United States has diminished the cyclical appeal of U.S. assets compared with foreign counterparts.
Positioning and sentiment gauges add to the downturn case for the greenback. MacroQuant reports that these indicators continue to lean against the currency, and it views the sharp rise in gold prices as another signal working to the dollar's detriment.
In contrast to the dollar call, MacroQuant has grown increasingly bullish on commodities. Gold is singled out as a core bullish recommendation. The model "has been very bullish on the yellow metal for most of the past two years," attributing that stance to a combination of central bank buying, sustained long-term price momentum, favorable sentiment and worries about fiscal policy. Although the model notes that overbought conditions are moderating the near-term score for gold, it still projects positive returns.
Copper has registered an even more pronounced shift in the model's view. BCA reports that MacroQuant "is now extremely bullish on the red metal," a reflection of an improved U.S. economic outlook coupled with continued support from sentiment and price momentum indicators.
The oil assessment has also moved markedly higher. BCA says the oil score has "increased meaningfully, moving into bullish territory," driven by strong price momentum and an uptick in geopolitical tensions that have supported crude prices. The model also cites firm global growth signals, manufacturing data and the outperformance of cyclical equities as reinforcing a more positive outlook for oil.
Summing up the shifts, BCA notes that the model has upgraded oil from extreme underweight to modest overweight and raised copper from neutral to extreme overweight, while remaining bullish on gold.
Investors reading MacroQuant's signals will find a clear tilt toward commodities and caution on the dollar, with the model's convictions grounded in momentum, valuation and sentiment measures. The model's current posture reflects a coordinated set of indicators rather than any single decisive driver, leaving near-term assessment sensitive to changes in volatility, positioning and price momentum.
Readers should note that MacroQuant's guidance is model-based and relies on the specific indicators highlighted by BCA Research. The firm's commentary emphasizes the interplay of valuation, earnings dynamics across regions, sentiment, momentum and geopolitical influences in shaping its current recommendations.