The above strategist wrote in a research note on Thursday: "The appreciation of the US dollar from now on will be fluctuating and the quality will be lower than the past year, and the market is still vulnerable to poor growth and inflation data."
It is understood that Fed officials have been making tough comments even after the Fed four major interest rate hikes this year pushed the indicator of the dollar's strength to rise by 9%. Meanwhile, the escalation of the Russian-Ukrainian conflict has driven energy prices to soar, putting Europe on the brink of recession and making it more difficult for other policymakers to increase borrowing costs.
In addition, the bank still expects the United States to avoid a full recession and expects the probability of a US economy to decline in the next 12 months is about 35%, but concerns about recessions in other regions and financial stability risks are also pushing the dollar higher, increasing the dollar's safe-haven attractiveness. Therefore, based on the trade-weighted index , the US dollar still has about 3% room for further appreciation.
Goldman Sachs said the dollar's past highs came amid sluggish economic activity, a strengthening stock market and the Fed's easing monetary policy, which may take several quarters to achieve. But factors such as the unexpected slowdown in the conflict between Russia and Ukraine may also drive the US dollar to turn earlier.
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