Goldman Sachs Waves White Flag on Short US Dollar Recommendation

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Goldman Sachs strategists made their bearish stance on the US dollar a reality as they finalized a recommendation to bet against the world reserve currency in the face of surprising strength. Since the beginning of October, Goldman Sachs had recommended shortening the dollar against a basket of major commodity currencies: the Australian dollar AUDUSD, -0.37%, the Canadian dollar CADUSD, -0.18%, the Norwegian krone NOKUSD , -0.08% and the New Zealand dollar. dollar NZDUSD, -0.51%. The operation was positive for the bank, with a gain of 5%, but a flat performance since the beginning of the year.

The DXY US Dollar Index, + 0.08%, which is a basket of six currencies, including the Euro, has gained 3% this year. Strategists led by Zach Pandl say strong US growth and rising bond yields may keep the dollar supported in the short term. They also say that the great opportunity will be to position themselves for a recovery in European activity. COVID-19 vaccines are expected to accelerate significantly in April and May, and that could lead to easing the lockdowns, they say. “The acceleration of European growth should help to undo some of the divergence with the US price in the national yield curves, as well as support the prices of raw materials and risk assets in general,” they say. While the yield on the 10-year Treasury bond TMUBMUSD10Y, 1.717% has risen to 1.71%, from 0.92% at the beginning of the year, the yield on the German 10-year bond TMBMKDE-10Y, -0.297% did not it has risen at most, to -0.30% from -0.61%. Strategists maintain their three-month euro / dollar forecast at $ 1.21 and their 12-month view at $ 1.28. The euro EURUSD, + 0.03% was trading at $ 1.1808 on Tuesday morning. US stocks closed at a record Monday, with the S&P 500 SPX up 1.44% to 9% this year. Related: A Defiant, Resilient Dollar Could Be A Trouble For US Stocks – Here’s When You Need To Worry