A client note issued prior to the past day of strength for the USD
This is not a day-trade view for the currency though, with a focus from the GS note further out:
- recent weak $ "may just be the beginning of a larger structural downtrend"
- has "poor medium-term fundamentals"
- "Lower yields do not necessarily mean overseas investors will sell U.S. assets, but we would expect fixed income portfolio inflows to slow, and for some investors to begin hedging FX risk in cross-border positions in both fixed income and equities, given much lower hedging costs"
- USD went into the crisis already overvalued, the further gains in February and March stretched valuations further
- GS look for the US to fall more than 20% over the coming years if the global economy continues to recover
