Commodity currencies might solely provide restricted upside towards greenback weak point – Goldman Sachs

Goldman Sachs is noting that even with potential for greenback weak point coming via, there’s warning to be heeded in chasing commodity currencies because the play for that. The agency says that the AUD, NZD, and CAD have all touched or practically touched their Three-month targets however have since eased towards the greenback.

Including to that, they’re noting that the three currencies talked about are displaying a lag in comparison with higher-carry EM currencies with uncommon relative weak point being noticed.

So, what offers?

Goldman Sachs is arguing that danger sentiment alone is not sufficient to clarify what is occurring. As an alternative, this appears extra to do with home coverage shifts with terminal fee pricing falling in Australia, New Zealand, and Canada. The agency provides that weaker home backdrops are additionally in play, warranting warning for the respective commodity currencies above.

In making the most of draw back catalysts for the greenback – which the agency attributes to Fed easing, coverage uncertainty, and world flows – there are higher choices by way of the EUR and JPY. As such, Goldman Sachs is sustaining a extra cautious bias on the AUD, NZD, and CAD however reaffirms that USD weak point might provide some type of upside nonetheless.

This text was written by Justin Low at investinglive.com.