US dollar: Poor medium-term fundamentals? – Goldman Sachs

The Goldman Sachs analysts, in their latest client note, cite that the US dollar weakness is likely to stay here, despite Thursday’s risk premium trades.

Key quotes

“Recent weak US dollar "may just be the beginning of a larger structural downtrend". 

The greenback has "poor medium-term fundamentals".

"Lower yields do not necessarily mean overseas investors will sell US assets, but we would expect fixed income portfolio inflows to slow, and for some investors to begin hedging FX risk in cross-border positions in both fixed income and equities, given much lower hedging costs" 

“USD went into the crisis already overvalued, the further gains in February and March stretched valuations further.”

“Look for the US dollar to fall more than 20% over the coming years if the global economy continues to recover.”