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Is Goldman Sachs Short the Dollar?

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According to Bloomberg, Goldman Sachs cut its U.S. dollar forecast, citing sluggish growth in the American economy.

Goldman also revised its forecasts for the dollar against other major currencies.

Goldman projects that the dollar will weaken to $1.45 per Euro--up from an earlier projection of $1.40--and 82 yen, down from an earlier projection of 84 yen.

Does Goldman Sachs have a vested interest in its prediction? Although the U.S. Dollar Index is down on the day, the index has rallied up from the all time low it reached earlier this month and may continue to rally as QE2 winds down in June.

PowerShares DB US Dollar Bearish Index (NYSE: UDN) is one ETF traders may wish to consider if they agree with Goldman's assessment. UDN is an ETF which attempts to correspond to the inverse value of the U.S. dollar and may do well if the dollar continues to decline against other currencies.

 

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