Thursday, June 10, 2010

"Goldman Formally Lowers EURUSD Target From $1.35 To $1.15; Time To Go Long"(GS)

EUR/USD is currently 1.2118.
We stuck our necks out and posted "Ready for a Positive Euro Surprise?" at 1.1917 on Monday.
Here's our last post on Goldman and the Euro: "Goldman Sachs on EUR/USD: "no freaking clue where the EUR will go next" (GS)", Fittingly enough on April Fools Day.
And now the latest, from ZeroHedge:
Full blown capitulation from the Goldman FX (strategic not tactical) team: the firm goes from a $1.35 target on EURUSD to $1.15. Score one more golden star for Goldman-Client relations. On the other hand, Thomas Stolper is officially advising clients to sell their euros to Goldman. There is no clearer signal to buy the beaten down currency.
Endogenous Political Risks to EUR/$
We have changed our EUR/$ forecasts to 1.15, 1.15 and 1.25 in 3, 6 and 12 months’ time. Since our previous FX Monthly, relative growth surprises have  disappointed relative to our expectations, while market projections for the policy rate differentials between the ECB and Fed rate have moved even further away from our forecast. Fiscal policy announcements in the US and Euro-zone place further pressure on our growth forecasts. Most importantly, the policy risk premium in the EUR has risen again, also reflected in sovereign and CDS spreads, leading to some re-thinking on what drives this process. We now think stretched short EUR positions can persist until currency weakness feeds into notably stronger growth, which then reduces the pressure on Euro-zone governments....MORE
GS has a chart and everything.