Goldman Sachs Research extract via eFX (For bank trade ideas, check out eFX Plus)
GS maintain a structural bearish bias on the USD in the medium to long term
- "We do not see reason to change our structurally bearish views. First, FX markets are more sensitive to changes in front-end rates, which are still pinned down by the Fed's average inflation targeting framework (we are skeptical US fiscal stimulus will lift the Dollar for this reason)
- Second, while the Fed may be done easing, changes to its asset purchase program are likely a ways off: Vice Chair Clarida said Friday that he did not expect any QE "tapering" until 2022 (consistent with GS expectations). Third, as a simple empirical matter, the trade-weighted Dollar tends to depreciate slightly when the US yield curve bear steepens; the same goes for the DXY index when the Yen is excluded"
Morgan Stanley earlier with the opposite idea:
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