Goldman Sachs on today's FOMC minutes release

The US Dollar has had a tough run this year, losing ground against all G10 currrencies, and most notably against the Euro, which is up 10.2% year-to-date (in total return terms). Moreover, the greenback still faces some meaningful headwinds, including overvaluation and a foggy fiscal policy outlook. But we do not think it is the right time to chase further USD weakness/EUR strength. The Euro has moved very far very fast—it delivered a 90-day trailing Sharpe Ratio over 4.0 from late June through early August—and from here we forecast a modest pullback in EUR/USD to 1.15. Instead, we think G10 FX investors should focus on the favorable global growth backdrop and the relative cyclical position across markets for the balance of 2017. We think a number of central banks that have been cautious in years past may be more comfortable talking about policy normalization, now that the global economy is on a more solid footing.

16 Aug 2017 - 16:20- ForexEconomic Commentary- Source: Goldman Sachs

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