It is the trade war, and not the Fed that is pushing the usd up (GS)

In an interview yesterday with Bloomberg TV, Zach Pandl of Goldman Sachs has estimated that, contrary to Trump’s repeated regularly, it is not the Fed that is the cause of the rise in the Dollar.

According to him, it is indeed rather the trade war between the administration Trump and China, as well as the flight to quality in Treasury bills, which have the most impact on the value of the dollar.

“The Fed is not the most important factor on the dollar at the present time,” said Pandl, adding that “the data show that the outputs of the portfolio of almost all countries, with the exception of the United States, are directed toward bonds during the month of August within the framework of a “leak classic to quality” that has also driven the dollar”.

President Donald Trump has denounced the impact of the appreciation of the dollar on u.s. manufacturers such as Caterpillar Inc, Boeing Co. and Deere & Co. and has been criticized on several occasions the Fed not to have cut rates to weaken the currency. The last critical date also yesterday, Trump has lamented the inaction of the Fed in the face of the ECB, which is according to him to successfully depreciate the Euro against the Dollar.

Pandl notes that the greenback fell on Thursday, despite reports that the administration Trump is considering a trade agreement, limited in China, and explains that “the prospects of global growth tend to increase the yields of the Treasury and to weigh on the dollar.”

However, the analyst of Goldman Sachs estimates that the dollar’s weakness may be “relatively short duration”. He said that the United States and China “both have interest to discuss in the short term, and this could lead to a flow of positive news continued for the next few weeks.

However, in a more careful, he warned : “But we still see a bar very high for any lasting agreement. We doubt to be on the path of de-escalation.”

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