Tuesday, January 19, 2021

Goldman Sachs nonetheless bearish USD

GS keep a structural bearish bias on the USD within the medium to long run

  • “We don’t see purpose to alter our structurally bearish views. First, FX markets are extra delicate to adjustments in front-end charges, that are nonetheless pinned down by the Fed’s common inflation concentrating on framework (we’re skeptical US fiscal stimulus will carry the Greenback for that reason)
  • Second, whereas the Fed could also be finished easing, adjustments to its asset buy program are doubtless a methods off: Vice Chair Clarida stated Friday that he didn’t anticipate any QE “tapering” till 2022 (in keeping with GS expectations). Third, as a easy empirical matter, the trade-weighted Greenback tends to depreciate barely when the US yield curve bear steepens; the identical goes for the DXY index when the Yen is excluded” 

Morgan Stanley earlier with the alternative thought:

Goldman Sachs Research extract via eFX (For bank trade ideas, check out eFX Plus)

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