The firm argues that the yen offers an attractive risk-reward going into the key risk event for markets this week
Goldman Sachs' co-head of global FX and EM strategy, Zach Pandl, argues to stick with long yen positions against the dollar, euro and loonie through the gathering of central bankers at the Jackson Hole symposium later in the week.
"If the Fed signals substantial easing to come, there will be a narrowing in rate differentials and that should push USD/JPY lower. Alternatively, any emphasis on still-decent domestic growth data and a wariness of deep rate cuts would lead to risk assets to underperform to the benefit of havens like the yen."
For the euro, Pandl argues that the carry tailwinds for the single currency will begin to unwind due to poor fundamentals outpacing that positive factor in the near-term. Adding that the potential for euro area PMIs and Fed speakers to disappoint market expectations could expose additional divergence between the US and the Eurozone.
As for the outlook before Jackson Hole, the firm says that any risk for the yen this week lies with "any additional reprieve" in the US-China trade conflict.