Forex - Dollar's Slump Is Over: Goldman
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
"We remain dollar bullish and think the trajectory is higher from here," Robin Brooks, Goldman Sachs’s New York-based chief currency strategist, said in an interview with Bloomberg Radio. "The reaction on Friday to a meaningfully weaker-than-expected payrolls was telling: We had a disappointing jobs number and the dollar actually bounced."
He predicted that the US currency will rally 15% against major currencies over the next two years as US monetary policy is normalized.
His comments came after the greenback saw its biggest advance in six months last week, paring its 2016 decline to 4.1%. Still, the currency fell for a third straight month in April.The US dollar index - a virtual measure of the strength of the greenback - gave up 0.15% on Wednesday to 94.147, hovering above its lowest levels since January 2015 of 92.626 seen recently.
Yet, the bank trimmed its expectations for Federal Reserve hikes, dropping the June hike for next month and removing a March hike from 2017.
"Overall, their hiking profile is therefore 50 basis points less over the next 18 months, though it remains the case that the cumulative tightening they foresee by end-2017 (125 basis points) dwarfs what interest rate futures now price on that horizon (35 basis points)," the US economics team wrote in a separate note.
"Here, our Economists have kept their expectation for the terminal rate unchanged at 3.38%, so that their forecast change makes the hiking cycle a bit slower (by two quarters), but not smaller. We therefore see some near-term downside risk to our bullish Dollar view, but less change to the long-run fundamental view."
A Bloomberg survey, meanwhile, predicted the dollar would strengthen to $1.11 per euro and ¥115 yen by mid-year.
source