Goldman Sachs expects the Federal Reserve to hike rates 4 times in 2018
But say that does not necessarily mean USD strength
GS cite
- the previous rate hike cycle in the US (mid-2004 to mid-2006) ... trade-weighted USD fell (around 7%)
- non-U.S. factors supported other currencies
GS suggest that cycle may be a "good template" for the USD performance in the current
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Biggest risks are:
- tax overhaul ... risk of failure
- aggressive US trade & foreign policy
GS say domestic & global influences favor EUR relative to JPY ... EUR appears undervalued, under-owned
- euro area above-trend growth, reduced political risk
- BOJ to hold JPY closely correlated with global bond yields
on GBP
- continued downside risks on Brexit deadlines & UK