Goldman on their general view of the USD as well as a few points on Jackson Hole this week:
Base case: USD likely to depreciate as US growth no longer justifies its high valuation; softening labor market reinforces this view.
Jackson Hole: Expect similar to last year—officials outline scope to ease without firm commitments but those hoping for explicit policy signals may be disappointed.
Rates: Incoming data and Fed speak suggest more room to run in front-end rates, and their house view is for three 25bp cuts.
Macro implication: Lower 'breakeven' payrolls and tighter labour supply imply weaker potential growth and a lower short-term neutral rate, which should both be negative for the USD.
Inflation: Recent prints (including PPI) point to consumer prices not constraining policymakers; PPI mainly highlights a volatile, uncertain operating backdrop for firms.
FX momentum: Recent USD downside came in quiet markets and from foreign drivers, showing path of least resistance is lower.
