VIEW: Goldman Sachs note that their.....>

EURO-DOLLAR: VIEW: Goldman Sachs note that their "economists have turned more

vocal about the case for European econ outperformance, and EUR has a number of

+ves from a FX standpoint, including a cheap valuation & a healthy BoP picture.

However, any further EUR/USD appreciation probably requires improving global

growth & at least stable mkt risk conditions. Over time, EUR/USD tends to have a

mildly +ve sensitivity to risky assets, and periods of falling equities & rising

EUR are relatively rare. We think this reflects structural factors that are

unlikely to change soon, including (i) reserve rebalancing effects following FX

intervention by EM central banks, (ii) the preference for US Tsys over German

Bunds for portfolio risk reduction, (iii) the greater cyclical sensitivity of EU

corporate earnings, and (iv) the dominant role of the US equity market, which

can result in USD+ve FX hedge adjustments after major drawdowns. We continue to

exp. a sustained recovery in the global econ, which should support our view for

EUR appreciation over the coming months. But at least at this stage we would not

recommend EUR/USD longs for investors seeking risk-negative USD shorts (for

which the JPY remains the best option, in our view)."