Closing Long USD Vs EUR And JPY Position For A 5% Loss - Goldman Sachs
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Markets have started out this week by aggressively de-risking, apparently owing to fears that the recent slowdown in global growth could descend into recession. Over the past five trading days, the S&P 500 is down over 4.5%, while 10-year Treasury yields have fallen by 22bp, ending yesterday at 1.75%. WTI oil prices declined 5.8% over this same period, but oil appears to have shifted out of focus this week. Rather, the focus has shifted to the financials sector, both in equity and in credit, where rising concerns about global growth suggest diminished prospects for earnings growth.
The strong risk-off moves in markets have pushed the USD lower, and we have been stopped out of our long USD vs EUR and JPY recommendation.
In our view, the direction of policy still favours USD strength, particularly vs the EUR and JPY, as the Fed eventually tightens and the ECB and BoJ continue to ease.However, the rapid decline in US market rates has dragged the Dollar weaker, and negative risk sentiment has benefited low-yield funding currencies such as the JPY and the EUR.
We close the position for a potential loss of around 5%.