Goldman Sachs said the biggest drop since 2011 in the dollar will not last long, and investors can earn profits if they buy into USD at the present time by the speed of economic growth America will be improved.
- Goldman Sachs forecasts the dollar in the next 12 months will increase by 18% compared to euro ($ 1 = 0.95 to the euro) and an increase of 8% versus the yen (more than $ 1 = 130 yen).
- Goldman is not the only strategist expects USD will regain momentum compared to other major currencies. The data will force the Fed to reverse and raise borrowing costs this year.
Last April, the index measuring the movements of the dollar against the major currencies was down 3%, marking the first monthly decrease since June and this is the biggest drop since 10/2011 .
The economic data worse than expected (including first quarter GDP growth), sparking speculation the Fed will keep interest rates at near 0 adding a long time to come. Meanwhile a report on the labor market in April was announced on the 6th to be an important indicator for the Fed to consider lifting interest rates.
With these factors, Goldman Sachs predicted the greatest economy the world will grow by 2.9% this quarter, after almost no growth in the previous quarter.
"After the" perfect storm "in March - delaying Fed raised interest rates and dismal labor market, the evolution of the dollar in the last week exactly a cry full of despair", experts Goldman Sachs analyst said. "It seems that the forex market has" tantrums ".
In the newly published report, the experts of Goldman Sachs said, in the next 12 months the dollar will increase by 18% compared to euro ($ 1 = 0.95 to the euro) and an increase of 8% versus the yen (up $ 1 = 130 yen). Earlier on Monday 31/3, the bank forecast 1 euro will be $ 1.03 and exchange 1 USD will exchange 126 yen.
Today, USD fell 0.4% to $ 1.1225 / euro and unchanged against the yen traded at 119.95 yen at / USD.
Goldman is not the only strategist that expects USD will regain momentum compared to other major currencies. Analysts forecast the data will force the Fed to reverse and raise borrowing costs this year.
Stan Shamu, experts from IG Ltd (Melbourne) said the highest trade deficit in 6 years is a sign that US economic growth will continue to slow, especially in the context of the Fed ended the program quantitative easing. "The trade deficit is an alarm bell. Does this mean that we will see growth in the US economy weaken further? In an environment where QE ended and direct interest rate rises, price pressures will weigh on the dollar because they all are looking for a safe landing.
Joseph Capurso - strategist from Commonwealth Bank to Bank of Australia (Sydney) - said that since peaking in mid-March, the dollar has cooled in the last 2 months but the rise will come back to the market My prediction raise rates.
Since the beginning of the year, the dollar is the currency best performing developed markets with an increase of 18%. Euro fell 7.4%, while the yen lost 2.1%.
Written By Peter Nguyen