Author: Benjamin Purvis
Article: Original article
Publication date: Friday, November 18, 2022
According to Goldman Sachs Inc. strategists' estimates, there are signs that the US dollar will keep rising.
As reported by Goldman Sachs strategists Dominic Wilson, Kamakshya Trivedi and Vickie Chang, the dollar still has many benefits as the economy and labor market remain in a strong position to manage ongoing headwinds. Other central banks are trying to catch up to the interest rate policy that the Fed has set.
They warned investors in a research note Thursday that the dollar's ascent would be volatile and less resilient compared to the previous year, citing that the market is still vulnerable to bad growth and inflation data.
They expect that the US will avoid an outright economic downturn, seeing a 35% chance of a recession within the year. However, the US dollar may strengthen and be more attractive to investors amid recession fears in other countries and risks to financial stability. The strategists highlighted that all these factors could lift the dollar roughly another 3% on a trade-weighted index basis.
The last time, it peaked amid a decline in activity, strengthening stock markets and Fed monetary policy easing.
EUR/USD decline in the medium term