Goldman Sachs Acknowledges Strong Dollar... Withdraws Dollar Sell Investment Recommendation

[Asia Economy Reporter Park Byung-hee] Goldman Sachs has withdrawn its dollar bearish investment opinion for the first time in six months, Bloomberg reported on the 5th (local time).

Goldman Sachs' foreign exchange investment strategy team recently announced in a report titled "Strategic Retreat" that it is retracting its dollar bearish investment stance on the currencies of the Group of Ten (G10) countries. The G10 currencies include the euro, pound, as well as the New Zealand dollar and Australian dollar.

At the end of last year, most financial institutions expected the dollar to weaken in 2021. However, due to strong U.S. economic indicators and factors such as the U.S. 10-year Treasury yield, the dollar showed unexpected strength. The U.S. Treasury yield has risen about 0.8 percentage points this year, increasing the attractiveness of dollar assets. The Bloomberg Dollar Spot Index has risen more than 2% since the beginning of this year.

In the report, Goldman Sachs stated, "We still expect G10 currencies to strengthen against the dollar over the next few quarters, but solid U.S. economic growth and rising U.S. Treasury yields may support the dollar in the short term," adding, "Therefore, we are withdrawing our dollar sell trade recommendation."

Jack Pandl, the investment strategist who authored the report, said in an interview with Bloomberg TV on the 5th, "Goldman Sachs still expects the dollar to weaken," and "Global economic recovery and the expansion of the U.S. fiscal deficit will be burdens on the dollar in the long term."

Currently, the U.S. economic recovery is clear, leading to dollar strength, but if signs of economic recovery spread widely worldwide, risk asset preference will become more pronounced, and the safe-haven dollar is expected to weaken.

Goldman Sachs also predicted in the report that if the COVID-19 situation in Europe improves, opportunities for dollar weakness will return.

Goldman Sachs expects the euro-dollar exchange rate, currently around $1.18 per euro, to reach $1.21 per euro in three months and $1.28 per euro within a year.

This content was produced with the assistance of AI translation services.