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May 29 - 12:55 AM

Goldman Sachs: Dollar Strength Likely to Persist Ahead of US Elections; Here is Why?

By eFXdata  —  May 28 - 04:30 PM

Synopsis:

Goldman Sachs anticipates that substantial depreciation of the US Dollar may be unlikely prior to the upcoming US elections, based on patterns observed in 2016 and the current economic outlook.

Key Points:

  • Historical Pattern: Reflecting on the 2016 elections, portfolio flows did not heavily favor markets with improving growth, suggesting a similar trend may occur this election cycle.
  • Economic Outlook: The strong performance of the US economy is expected to continue supporting the Dollar.
  • Election Risks: Upcoming election risks are likely to influence market sentiment and currency stability.
  • Inflationary Catalysts: Potential new inflationary triggers, such as tariffs or increased fiscal spending, could drive the Dollar stronger.

Conclusion:

Goldman Sachs forecasts that the Dollar will maintain or even enhance its strength relative to other currencies in the months leading up to the US elections. This stability is attributed to solid economic fundamentals and heightened market cautiousness due to electoral uncertainties.

Source:
Goldman Sachs Research/Market Commentary

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