Fed: Not dovish, just complicated – Goldman Sachs

Research Team at Goldman Sachs, suggests that since they called the Dollar bottom recently, the greenback has risen sharply, aided by relatively hawkish minutes.

Key Quotes

“In our opinion, Wednesday’s price action is informative in two important respects. First, if something as small as Fed minutes can boost the Dollar nearly 1 percent, it shows that underlying appreciation pressure on the greenback is substantial, which helps put in perspective our forecast for USD to rise 15 percent through 2018.

Second, the minutes underscore just how volatile Fed communications have been, including the very dovish September meeting, the switch to hawkish in October, etc.

Normalizing policy, given that USD could appreciate a lot, is difficult for the Fed to do. Managing that process makes the Fed volatile and complicated, not dovish.”