As often as not Goldman ends up being wrong on their currency calls.
Whether this is by design I don't know, the ZeroHedge guys delight in highlighting the reversals but not the correct recs, so who knows? The spot dollar index (DXY) is at 100.26, up 0.83% on the day.
From Barron's:
It’s all about currency moves in the markets on Friday.I do know I hate being treated like a muppet so it might be time to dance a bit closer to the exits on any currency or currency driven trades.
The euro briefly fell below $1.05 against the dollar, its weakest in 12 years. A year ago, the euro was near $1.40 versus the greenback, roughly 25% higher.
The CurrencyShares Euro Trust (FXE) fell 0.9% in heavy trading. Its flip side, the PowerShares DB US Dollar Index Bullish Fund (UUP), climbed 0.7% to its highest level since 2009.
Traders couldn’t pin Friday’s moves to any discrete events, but anticipation for an interest-rate hike in the U.S. has intensified in recent weeks. At the the same time, the European Central Bank kicked off its program to gobble up bonds this week. The former provides a direct boost for the buck while the latter weighs on the common currency.
Goldman Sachs‘ currency strategists led by Robin Brooks on Friday slashed their estimates for the euro/dollar across the board. Goldman forecast that the euro and dollar will trade at parity, one-to-one, in six months. Previously, Goldman didn’t think it could happen until the end of 2016. Goldman also foresees the euro falling as low as $0.80 by the end of 2017 versus the buck. That would be the weakest, well, ever.
We think this price action bears out one important thing we have been emphasizing, which is that – especially when controlling for the divergent paths of growth and monetary policy – short EUR/$ positioning just isn’t stretched.......MORE
