Trial now
AUSSIE 10-YEAR TECHS

(Z1) Off Lows, But Remains Weak

USDCAD TECHS

Still Vulnerable

AUDUSD TECHS

Bullish Price Sequence

USD

Goldman Sachs note that "despite the Dollar rally to start 2021 we are not inclined to change our bearish medium-term forecasts. First, the economic outlook primarily features a synchronized global rebound, not regional divergence. Every country in the world is dealing with the same challenge -controlling covid while supporting the economy - and all will rebound as vaccination allows a reopening of high-touch industries. Until the vaccination process progresses further, we favor positioning for a broad global recovery through USD shorts rather than variation in near-term growth prospects through non-USD crosses. Second, further steepening of the US yield curve should not have major implications for most currencies (although JPY may be an exception). Front-end rate differentials matter much more for currency markets, and the Fed has made a credible commitment to keep policy rates at zero until inflation picks up. Third, we still think the starting point matters: the Dollar is highly valued and highly positioned after a long stretch of US economic and asset market outperformance, suggesting greater downside than upside for Dollar crosses. We therefore stay short USD vs CAD and AUD in G10, vs a basket of crosses in EM, and vs CNY (via unhedged CGBs)."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com