Goldman Sachs, a leading global investment banking and securities firm, has issued a preview of the forthcoming Federal Open Market Committee (FOMC) meeting, emphasizing its impact on the US dollar's trajectory.
According to Goldman Sachs, the FOMC is likely to hold interest rates steady at the upcoming meeting. However, it may revise the median terminal "dot" upwards once again, indicating an increase in federal funds rate expectations over the long term.
Goldman Sachs has been anticipating a gradual and bumpy deceleration of the dollar this year. However, two factors need to align for this to happen: Clarity on the Federal Reserve's peak interest rate, marked by noticeable easing in inflation pressures, and the appreciation of the Euro and Chinese Yuan, which necessitates improved capital return prospects.
While Goldman Sachs maintains that the dollar should depreciate slightly from current levels, it notes that there has been minimal progress on these two conditions so far. This suggests that the dollar's depreciation might be more likely in the later part of the year, subject to changes in inflation pressures and the relative strength of other major currencies.
This forecast implies a need for investors to keep a close eye on global inflation trends, central bank policies, and the relative performance of major currencies to understand and navigate the potential shifts in currency markets
For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per
month. Get it here.
