Goldman Sachs Group recommended shorting the dollar about six months ago, but with improved U.S. economic data and soaring bond yields, supporting the dollar’s rally, Goldman Sachs now has to raise the white flag of surrender.
The DXY dollar index, which tracks the dollar’s movement against six major currencies, fluctuated in a narrow range above and below the flat market on the 5th, once up 0.1% at 93.11 during the day.
Goldman Sachs foreign exchange team in the “strategic retreat” report, no longer recommended short dollar against the Australian dollar, the New Zealand dollar and a basket of G10 currencies. With the rise in bond interest rates driving the dollar exchange rate back up, Goldman Sachs joined the ranks of safe-haven funds and other investment institutions to give up betting on shorting the dollar.
Pandl (Zach Pandl) and other Goldman Sachs strategist group 2 said in a report: “Although we still expect these currencies will rise against the U.S. dollar in the next few quarters, but the U.S. economy is growing steadily and bond yields rise, may continue to support the dollar in the short term. After the oscillating trend of the past few months, we no longer recommend shorting the dollar”.
The general consensus at the end of last year that the dollar would depreciate has collapsed due to better economic data and a surge of 80 basis points in the U.S. 10-year bond yield, making the dollar more attractive.
The dollar index has jumped more than 3% this year. Reuters reported that the dollar’s exchange rate against major currencies in the first quarter wrote the best quarterly performance in nearly three years, analysts believe that with investors optimistic that the global economy will further recover from the new crown epidemic, the dollar is expected to maintain the uptrend.
However, the Goldman Sachs team said that if the epidemic in Europe improves, the opportunity to short the dollar may resurface.
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