We expect the best FX opportunities into year-end in European currencies, including the Euro and Sterling. Growth surprises and revisions of consensus growth expectations are currently most supportive for these currencies. Given the ongoing healing after the Euro area crisis, more upside growth revisions are likely and will contribute further to already strong capital inflows. We also expect further depreciation of current account deficit currencies, in particular in EM. With European FX strength and depreciation pressures in EM deficit countries occurring at the same time, we continue to believe that the trade-weighted Dollar will remain range-bound. Our forecast revisions reflect these views, with a year-end target for EUR/$ of 1.38 and GBP/$ of 1.68; we had already revised lower a number of EM currencies forecasts during the summer months. In addition, we show notably more weakness in our TRY forecasts and in a number of LatAm current account deficit currencies, including the BRL, COP and CLP. Forecast revisions in EM countries with better external fundamentals have been minor (MXN, PLN).
Thomas Stolper, Robin Brooks, Themistoklis Fiotakis, Fiona Lake, and George Cole - Goldman Sachs
Read More: http://www.efxnews.com/story/20714/here-are-best-fx-opportunities-year-end-goldman-sachs
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