Goldman Sachs argues for a lower USD against the Australian and Canadian dollars
AUD and CAD should benefit from
- global growth momentum
- improving terms of trade
- outlook for their monetary policies
GS also like the South African Rand
- "preferred candidate" among higher-yielding currencies
Under our base-case scenario of stable and above-trend global growth as well as a still-gradual Fed, the U.S. dollar should weaken versus both G10 and EM exchange rates
On EMs, the bank pick the currencies and local debt of Colombia, Peru, Chile, citing:
- they've lagged improvement in commodity prices
- have largely put political risks in the rear view
Staying clear of Brazil and Mexico due to local elections,
- awaiting "political clarity"
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I'm gonna have to take issue with GS on expecting higher interest rates in Australia. Any rate hikes, should that be the next move, is likely a long, long way off
(ps. Macquarie just changed their call for an RBA rate hike from early 2019 to early 2020)
