From Goldman Sachs latest ‘The Global FX Analyst’ client note (at a hefty 71 pages that’s one helluva note).
Major FX views (in brief):
- Still USD bulls – four major drivers – interest rate differentials, shifts in the oil balance in the US, safe haven
demand and reserve recycling - The ECB has eased, pushing the Euro weaker – we have changed our 3-month EUR/USD forecast to 1.35 from 1.38. Our 6- and 12-month forecasts are unchanged at 1.34 and 1.30 (ps. I had this yesterday, here: Goldman’s latest Euro forecast, EUR/USD and EUR/GBP lower… hot across the wires!)
- The USD/JPY… relative monetary policy dynamics are likely to change in October, when the Fed ends its tapering process and the BoJ eases policy further as inflation softens into year end, thus providing a kicker for USD/JPY higher
- Dovish commentary likely to push CAD and AUD weaker
- BoE has been more hawkish pointing to a lower EUR/GBP
- The CNY fix is becoming more volatile
