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| Taken on July 17, 2022, this illustration shows US dollar banknotes. (Dado Ruvic/Image) |
Investors wanting to know when the dollar will peak may have to wait a few more quarters, Goldman Sachs said in a research report on Friday.
Based on past cycles, Goldman said, dollar peaks are usually associated with "troughs in U.S. and global growth indicators" and an easing in the Federal Reserve.
Goldman said it doesn't expect the Fed to start easing until 2024, noting that a stronger dollar looks "a few quarters away."
A US investment bank said the dollar was supported by stable economic activity in the US and that inflation was still rising despite several big rate hikes. The Fed has acknowledged that a “limiting” policy rate is a moving target, and estimates of the cyclical neutral rate are rising.
As does the Fed, Goldman economists now expect a longer hiking cycle and even higher end-of-term interest rates.
Meanwhile, the Eurozone continues to face severe challenges from energy shortages. At the same time, the smaller G10 economies are more sensitive to rising interest rates and changes in policy rates, such as the rise in variable-rate mortgages.
In contrast, Goldman said the economic outlook for the U.S. economy is bright and may be less sensitive to rising interest rates, which should support the dollar.
Goldman's three-month forecast sees the euro depreciating about 9% from current levels to reach $0.94 against the dollar. The euro was flat at $1.0356 on Friday.
Goldman said the eventual dollar peak should coincide with an improving outlook for global economic growth and new capital flows abroad.
Still, Goldman says a dollar high could come sooner than expected if the Fed pauses rate hikes, a path to more stable energy supplies emerges in Europe, or China reopens its economy faster. said to be sexual.
(Source: Reuters)