(Bloomberg) — The downside risk to the US dollar posed by the Federal Reserve’s coming interest-rate cuts is limited because other central banks are easing policy, too, according to an analyst from Goldman Sachs Group Inc.
In fact, such synchronized cycles of rate cuts are usually associated with a stronger dollar, the currency analyst, Isabella Rosenberg, wrote in a note to clients. She based that on an analysis of rate cuts since 1995 and the degree of policy coordination among the developed nations.
“If most central banks are easing together, we can expect that to limit the degree to which Fed easing will weigh on the dollar,” she wrote. “While the market is pricing a faster Fed pivot, we still think other central banks would ease policy more if the Fed gave them the space to do so.”
The Fed is expected to make its first rate reduction next week, joining the European…
