Posting as an ICYMI, Goldman Sachs expect the US dollar to be “stronger for longer.”
Citing:
- upgrades to already-robust US growth forecasts
- therefore the FOMC will cut rates later and more gradually
- most other developed market economies will begin their rate cutting cycle sooner with sequential rate cuts
- U.S. election should limit portfolio flows to other jurisdictions when both candidates have proposed more fiscal support and trade restrictions
GS says:
- “This opens some policy divergence in our baseline outlook, which leans in the direction of a 'stronger for longer' U.S. Dollar”
- “Importantly for FX, the rate cuts we anticipate are unlikely to be significantly negative for the Dollar because they are unlikely to erode the Dollar’s position as a relatively high carry, safe-haven currency with strong capital return prospects.”
EUR/USD forecasts
- $1.05 in three months, $1.05 in six months and $1.08 in a year
- from $1.08, $1.10 and $1.12 respectively
