Dollar analysis from Goldman

According to Goldman Sachs, if the Fed keeps interest rates at these levels for a long time and lowers borrowing costs for other countries, the dollar could maintain its strength. Goldman Sachs analysts Kamakshya Trivedi and Joseph Briggs said, "If the Fed keeps interest rates unchanged and other countries cut rates instead of waiting for the Fed, policy divergence could cause the dollar to move higher for a longer period." Analysts predicted that interest rate cuts in Canada, the Eurozone and the UK would begin in June. The dollar gained value against all G10 currencies this year. After the good inflation data for April, doubts about the expectation of two interest rate cuts in the markets increased. A 40 basis point cut from the Fed by the end of the year is being priced in swap markets. The first cut is expected to occur in November with 25 basis points. Fed Board Member Christopher Waller said in his speech yesterday that they wanted to see 'good inflation figures' for a few more months before starting to cut interest rates. On the other hand, European Central Bank President Christine Lagarde gave the green light to cut interest rates next month, stating that inflation is under control. Goldman analysts stated that the divergence between macro and policy has become more apparent and that policymakers are closely monitoring changes at the Fed to limit exchange rate volatility. Analysts said, “If central banks around the world cut interest rates relatively earlier and more aggressively than the Fed, this would help the US achieve its inflation target.”