Goldman Sachs starts shorting the dollar as economic reopenings boost foreign currencies
Ben Winck, 01 June 2020
Economic reopenings outside the US are lifting foreign currencies and creating a strong opportunity for some bets against the dollar, Goldman Sachs strategists said in a Sunday note.
Cash assets served as an initial safe haven for investors as the coronavirus spread throughout the US in March and fueled new recession fears. With economic reopenings taking effect around the world and new stimulus measures further lifting sentiments, the firm highlighted the Norwegian krone as best suited for a bet against the dollar.
“We have maintained for some time that it was too early to look for outright and sustained dollar downside given the balance of cyclical risks,” the team led by Zach Pandl wrote. Yet “the steady reopening process, limited evidence of a pickup in COVID infection rates” and new relief policy like the EU Recovery Fund make Norway appear “well-positioned to outperform through the coronavirus shock,” they added.
