9clubslot| Goldman Sachs: Dollar will be stronger in anti-inflation battle or remain strong for longer

Goldman Sachs believes that if the Fed keeps interest rates stable,9clubslotIf other countries choose to cut interest rates, the US dollar may remain strong for a longer period of time.

The strategy team led by Kamakshya Trivedi and Joseph Briggs wrote in a report to clients9clubslot:"If the Fed remains stable but more other jurisdictions decide to implement easing at home rather than wait for the Fed, this policy divergence could lead to the dollar remaining strong for a longer period of time." These analysts believe Canada, the UK and the eurozone will cut interest rates in June.

So far this year, the U.S. dollar has risen against all G10 countries, with the Bloomberg index tracking the strength of the U.S. dollar rising nearly 3%.

Last week, markets quickly digested expectations that the Fed would cut interest rates twice after the release of moderate inflation data for April, and traders expressed doubts that the Fed would still cut rates twice. Currently, the swap market expects the Federal Reserve to cut interest rates by about 40 basis points by the end of this year and will cut interest rates by 25 basis points for the first time at the November policy meeting.

Federal Reserve Governor Christopher Waller said on Tuesday that if U.S. data continues to weaken over the next three to five months, the Fed will be allowed to consider reducing borrowing costs by the end of 2024. At the same time, European Central Bank President Christine Lagarde said interest rates may be cut next month as the rapid growth of consumer prices is basically contained.

Analysts wrote: "Where macro and potential policy differences are more evident, policymakers have been closely watching the Fed's changes to limit currency volatility. If central banks around the world start cutting money 'relatively earlier and more vigorously' than the Federal Reserve, it will help the United States achieve its inflation target."