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Aug 22 - 09:55 AM

Goldman's Analysis: The Dual Forces Driving the Dollar's Rise

By eFXdata  —  Aug 22 - 08:30 AM

Goldman Sachs identifies two dominant narratives shaping the current market dynamics: US Resilience and China Challenges. In the realm of foreign exchange, both these themes culminate in an amplified strength for the USD.

1. US Resilience:

  • Positive Economic Momentum: The US has showcased robust economic performance even amidst global challenges.
  • GDP Revision: Goldman's economists have adjusted their Q3 GDP tracking upwards by 1.1 percentage points in just the past week, reflecting a brighter outlook for US growth.

2. China Challenges:

  • Economic Hurdles: While specifics aren't detailed in the given excerpt, China is likely facing a combination of domestic and external pressures that might be causing economic uncertainties.

Implications for the Dollar:

  • Unified Outcome: Despite the contrasting natures of these themes (positive for the US and challenging for China), in the FX market, they both align to boost the USD's strength.

Looking Ahead: Goldman Sachs does not anticipate any immediate relief from this Dollar-strengthening trend, especially given their positive sentiment regarding US economic activity. The continued buoyancy of the US economy coupled with challenges in China makes a case for sustained USD strength.

Conclusion: Investors and market participants will need to position themselves considering this dual narrative, with implications reaching beyond just the currency markets.

Goldman Sachs Research/Market Commentary


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