Goldman Sachs views on a December Federal Reserve rate hike following the strong NFP report

Jan Hatzius (Goldman Sachs chief economist) says

  • October employment report "solidly better­-than-­expected"
  • Now sees an FOMC rate hike at the December meeting as very likely

And, from Goldman Sachs' global macro research group (Robin Brooks, George Cole, Michael Cahill)

  • Employment data has made December lift-off all but certain
  • Markets (are) still suffering the after-effects of "The Interlude" - are hesitant to embrace dollar longs again

'The Interlude' they are referring to is:

  • the period from the March FOMC to recent ECB and Fed meetings

On the USD, they say:

  • We think there is little doubt that lift-off will be positive for the USD
  • We see plenty of scope for Dollar strength as the Fed normalizes monetary policy, in part because the amount of stimulus in recent years has been so large and unusual
  • EUR/USD to go to parity then lower
  • To 0.95 within 12 months