The Markets Will the dollar keep dropping?
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Jul 25, 2025 Kunal Shah, Co-CEO of Goldman Sachs International and a leader in Fixed Income, Currency, and Commodities, shares his expert views on the future of the US dollar. He discusses the impact of European fiscal investments on U.S. exceptionalism and the shifting dynamics in global markets. Shah also addresses the challenges facing China's economy and central bank policies, while highlighting potential currency trades like the euro-dollar. His insights offer a roadmap for navigating the financial landscape amid ongoing market volatility.
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US Market Rally Has Limits
- The recent US risk asset rally has strong fundamentals like earnings and deregulation.
- However, technical indicators suggest cautiousness as some froth and re-risking may be peaking.
Europe Growth vs. Challenges
- Europe has growth potential, especially Germany outpacing the US by mid-next year.
- Yet, broad European fiscal expansion and political challenges limit a unified bullish Europe trade.
Monetary Policy Gap Drives Euro Up
- The ECB is likely done with rate hikes while the US Fed may ease policy in coming months.
- This monetary policy gap could drive the euro higher against the US dollar again.