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<\/a><\/p>\nAs Goldman sees it, there are two possible outcomes for the currency in coming weeks: if the global growth outlook improves, it will weaken as investors veer to riskier assets; if the world economy does enter a recession, the dollar\u2019s path is murky.<\/p>\n
In the former case, the dollar should be shorted against most currencies, with the bank particularly favoring commodity exporters like the Canadian dollar. In the latter, the Japanese yen will likely outperform the dollar as it usually does well during recessions. The analysts forecast an increase of as much as 20% for the yen if a recession strikes.<\/p>\n
\u201cThe dollar\u2019s performance in and around recessions is less clear-cut than for other assets — it depends on the exact timing of events across regions, how US asset markets fare compared to others, etc.,\u201d Pandl and others wrote.<\/p>\n
To be sure, whether the US will sink into recession is a matter of debate on Wall Street. Goldman\u2019s Senior Chairman Lloyd Blankfein said on CBS\u2019s \u201cFace the Nation\u201d on Sunday it\u2019s a \u201cvery, very high risk.\u201d<\/p>\n
Yet Goldman\u2019s Senior Credit Strategist Amanda Lynam told Bloomberg TV\u2019s Surveillance Monday the firm\u2019s economists are not pricing in a recession this year as their base case, though she discussed scenarios involving an economic slowdown.<\/p>\n
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