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Key Moments

  • Goldman Sachs expects a gradual flow of delayed U.S. economic data to show a softer economy and labor market, paving the way for more policy easing and a weaker dollar into year-end.
  • The bank highlights subdued FX volatility so far, with early indications suggesting softer momentum despite lagged data releases.
  • Goldman Sachs and Credit Agricole both point to a combination of global risk sentiment, policy expectations, and country-specific drivers as supportive of broad-based dollar weakness through year-end.

Goldman Sachs Sees Softer Data Undermining Dollar

Goldman Sachs argues that the slow and staggered release of previously delayed U.S. economic indicators should “reveal a softer run rate for the economy, particularly the labor market, that will clear the way for more policy easing and a weaker dollar from here to the end of the year”. The firm notes that early signs are already hinting at weaker momentum, although the information appearing in official data releases has been lagged.

According to the bank, this lagged profile has so far contributed to relatively contained foreign-exchange volatility. Despite that, Goldman Sachs maintains that the direction of travel for the underlying data should ultimately reinforce a weaker outlook for the dollar as the year progresses.

Macro Backdrop and Policy Expectations Pressure the Greenback

Beyond the data flow, Goldman Sachs points to a combination of macro and policy-related factors that it believes will weigh on the U.S. currency. The bank cites a more stable global risk sentiment backdrop and prevailing expectations for Federal Reserve rate cuts as additional headwinds for the dollar over this period.

These elements, in Goldman Sachs’ view, add to the case for dollar softness as investors reassess relative monetary policy paths and risk appetite across major markets.

Cross-Asset and Cross-Currency Drivers

Goldman Sachs also underscores several currency-specific dynamics that could reinforce a weaker dollar profile across key FX pairs:

DriverCurrency Pair / MarketImpact on Dollar
Stronger intervention warnings by Tokyo to limit upside in USD/JPYUSD/JPYActs as a cap on dollar gains versus the yen
GBP resilience following a more benign UK budgetGBP vs USDSupports the British pound and weighs on the dollar
Renewed strength in the CNYCNY vs USDProvides an additional source of pressure on the dollar

The bank characterizes these developments as broadly supportive of a softer dollar across major currencies, complementing the macro and policy narrative.

Credit Agricole Aligns on Year-End Dollar Weakness

In a similar vein, Credit Agricole has linked a range of factors to its own view that the dollar should weaken into year-end. Referring to its earlier analysis, the bank highlighted that “Seasonal patterns, fundamentals point to dollar selling in December – Credit Agricole”.

Together, the perspectives from Goldman Sachs and Credit Agricole underscore a growing consensus among these institutions that multiple macro, policy, and currency-specific forces are aligned against the dollar as the year draws to a close.

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