Goldman Sachs note on currencies (dated October 2), recommending buying USD against the euro.
Analysts in the note cite:
- U.S. economic strength
- Prospects for further Federal Reserve interest-rate increases
"Euro-dollar downside is our preferred expression of dollar strength in the near-term."
- Say EUR/USD to 1.15 by year-end
- European equity markets have been underperforming
- European political landscape views "seem to be resetting lower" - citing current developments in Spain, along with elections in Austria and Italy in coming months
- ECB to most likely pursue a "relatively dovish taper timeline" (due to slow inflation)
Separately, on GBP:
- UK "political fissures" over Brexit
- Therefore difficult to see sustained sterling strength
- Even though there are prospects for a Bank of England rate hike
