Please try another search
© Reuters. Goldman Expects Further Dollar Strength, Says Peak 'Feels Several Quarters Away'
By Senad Karaahmetovic
Goldman Sachs strategists expect to witness further U.S. dollar strength over coming months amid continued Fed hikes, as well as a "resilient US growth/inflation mix."
Historically, the dollar tends to weaken significantly when activity bottoms, in conjunction with the easing Fed. This type of environment would allow the dollar to weaken while global growth and risky asset should recover.
However, the USD peak "still feels severely quarter away," the strategists warned the bank's clients.
"We do not expect the Fed to embark on easing until 2024, and a trough in growth also seems months away. But given the current backdrop of extremely elevated inflation, it may make sense to overweight the experience of the mid-1970s and the mid-1980s, when inflation was similarly high. In those periods, the Dollar appears to have peaked with some Fed easing but US interest rates still near their peak, and with global and US growth still declining rather than at the trough," the strategists wrote.
Along these lines, an early USD peak may be possible in the case that Fed rate hikes start coming to an end, or if Fed starts to communicate its pivot intentions. This scenario may play out "at some point in the first half of 2023."
"We could be through the worst of Europe's winter recession, a new leadership at the BoJ may gradually start to tighten policy, and China's zero covid policies may be on their way out, at the same time as a peak in US rates is finally coming into sight alongside some moderation of US inflation and the labor market."
"But we are not there yet," Trivedi concluded.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.