Goldman Sachs suggests that the euro should now be considered the financing currency of choice, especially compared to the Swiss franc and Japanese yen, given current market conditions and expectations for the currency’s performance.
Key points:
- The company uses its market systems framework to analyze forex performance based on return trend and price volatility, suggesting that the current environment favors the euro.
- Their base forecast calls for rising stocks, stable returns, and low interest rate volatility, which could lead to renewed dollar weakness and cyclical outperformance of G10 and emerging market currencies.
- Although the dollar is likely to strengthen in the near term – especially if US stocks reflect stronger domestic growth expectations compared to their European counterparts – overall sentiment is leaning towards a weaker dollar in the longer term.
- In light of these circumstances, Goldman Sachs advocates the euro as the financing currency of choice, preferring it to the traditionally safer Swiss franc and Japanese yen.
conclusion:
With shifting market dynamics and uncertainties looming, Goldman Sachs identifies the euro as a more attractive financing option, which could enhance its appeal on the back of stable returns and positive equity performance. This perspective confirms the changing landscape in currency markets amid evolving economic conditions.
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