20 Jan 2015
USD to outperform G10 currencies – Goldman Sachs
FXStreet (Mumbai) - The investment bank Goldman Sachs expects the US dollar to outperform other G-10 currencies on increasing monetary policy divergence.
“We expect USD strength across the rest of the G-10 complex to continue through 2015, with the USD likely posting a 7% appreciation versus the majors by end-2015 after the 10% appreciation recorded in the second half of last year.”
The banks further says, the recent gains in the USD have been driven mainly by non-US factors as the markets priced-in a substantial easing measures from the ECB and the BOJ, and to a lesser extent from the Norges Bank and the Risks Bank; alongside a more dovish rhetoric from the Bank of England. Meanwhile, softening of commodity prices have weakened AUD and CAD.
However, going forward, the bank expects the dollar strength will be largely driven by Federal Reserve policy and broader US economic strength.
“We expect USD strength across the rest of the G-10 complex to continue through 2015, with the USD likely posting a 7% appreciation versus the majors by end-2015 after the 10% appreciation recorded in the second half of last year.”
The banks further says, the recent gains in the USD have been driven mainly by non-US factors as the markets priced-in a substantial easing measures from the ECB and the BOJ, and to a lesser extent from the Norges Bank and the Risks Bank; alongside a more dovish rhetoric from the Bank of England. Meanwhile, softening of commodity prices have weakened AUD and CAD.
However, going forward, the bank expects the dollar strength will be largely driven by Federal Reserve policy and broader US economic strength.