Posted 6 months ago | by @devadmin
According to Goldman Sachs analysts, the risks arising from vaccine trials and the uncertainty of the U.S. election could weaken the dollar, CNBC reported.
If the U.S. dollar continues to lose its purchasing power, it could mean that safe-haven asset gold and Bitcoin could gain significant bullish momentum in the last quarter of 2020. Zach Pandl, co-head global FX, rates, and EM strategy at Goldman Sachs said the following.
“To be sure, there are important risks: we are most uncertain about the length of the vote count (especially for the Senate) and the equity market reaction to a ‘blue wave’,” Pandal said. “But the wide margin in current polls reduces the risk of a delayed election result, and the prospect for near-term vaccine breakthroughs may provide a backstop for risky assets.”
While the uncertainty of the upcoming U.S. election has been considered as a factor of the weakening of the dollar, there’s another risk posed, the effectiveness of vaccines. With various reports of issues being caused by vaccine trials.
If the vaccines that are released turn out to be less effective than expected or cause injuries, economic recovery would be pushed back by at least another quarter.
Goldman is predicting that the dollar will be heading into negative territory in the fourth quarter, the firm is recommending two U.S. dollar short trades, selling the asset and buying it back at a lower price. The team at Goldman expressed:
“In our view, a ‘blue wave’ U.S. election and favorable news on the vaccine timeline could return the trade-weighted Dollar and DXY index to their 2018 lows.”
If the dollar drops, as explained by Goldman Sachs, alternative assets that are priced against the dollar, including gold and Bitcoin could potentially rally even higher.
Bitcoin surged on news that Paypal will soon allow its 350 million customers and 26 million merchants to buy, sell and hold cryptocurrency.
Bitcoin is currently trading at [FIAT: $12,912] UP +1.5% in the last 24 hours according to Coingecko at the time of this report.