Goldman Sachs 2019 macro outlook
- We expect the broad Dollar to decline in 2019 as the US growth boom “catches down” to the moderate pace of expansion in the rest of the world.
- The Euro has room for appreciation, but only on a resolution or containment of the budget standoff in Italy—until then, risks are skewed to the downside.
- We see meaningful upside to the Pound should the UK secure a status quo transition deal with its EU partners. But as recent days have shown, Brexit talks could still result in a wide range of potential outcomes.
- We have revised our long-standing bearish view on the Yen due to slower US growth, a more challenging risk asset environment, and possible policy tweaks by the Bank of Japan.
- Latin American currencies should outperform their EM peers next year. We see the best scope for spot appreciation in the Chilean Peso on solid domestic fundamentals and higher copper prices.
- The near-term outlook for the Yuan is conditional on trade talks; beyond that, look for broad stability due to improving growth on the one hand, but a weaker current account balance on the other.
- Central banks in nearly every small open economy in G10 and the CEEMEA region look set to continue or start raising rates in 2019. We see the most near-term upside in the Swedish Krona, the Canadian, Australian, and New Zealand Dollars, and the Israeli Shekel.
- It has been a bumpy year for the high-yielding CEEMEA currencies. While volatility will likely remain elevated, we think the South African Rand still has favorable medium-term prospects.