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According to Goldman: Here Is Why Now's A Good Time To Buy USD Tactically

Monday, August 10, 2015 6:01 AM GMT

- Greek bailout negotiators see potential for draft deal by Tuesday of this week.

- Austria has "AA+" rating affirmed by Fitch, outlook stable. Ireland has "A-" rating affirmed by Fitch, outlook from stable to positive.

- On a weekly basis, this is the lowest close for #USoil since early 2009.

- According to OECD's Purchasing Power Parity: $CHF, $AUD, $GBP are the most overvalued majors vs $USD at 28.17%, 12.2%, 8.84% respectively.

- #Goldman Sachs has been and remains a structural USD bulls... 1- "Tactically, we think now is a good time to position for Dollar strength. That is because some of the progress the #Fed made last year towards data dependence has been undone since March's FOMC, when Chair Yellen memorably said that dropping “patient” does not translate to impatience," GS advises...2."Since then, our estimate for the sensitivity of two-year yields to US data surprises has fallen back to near “calendar guidance” level, meaning that – even though it de jure abandoned forward guidance in March – de facto the market sees the Fed as having gone into reverse. 3. "Regardless of when 'lift-off' happens, we think this means that more of a risk premium needs to go into front-end US rates, which is Dollar positive. 4. "Dollar upside is also actionable because falling oil prices are most obviously a threat to those places – the Euro area and Japan – that are battling deflation...

- China Slashes U.S. Debt Stake by $180 Billion -- and Bonds Shrug. To get a sense of how robust demand is for U.S. Treasuries, consider that China has reduced its holdings by about $180 billion and the market barely reacted. Benchmark 10-year yields fell 0.6 percentage point even though the largest foreign holder of U.S. debt pared its stake between March 2014 and May of this year, based on the most recent data available from the Treasury Department.

- Top event risks this week: August’s German ZEW Survey on 11/8, July’s US Advance Retail Sales 13/8, (2Q’s P) German GDP 14/8.

- There are many similarities between Cyprus' and Greece's economic crises – not least how they were treated by their creditors. Few of the people sitting around the table at the countless and interminable Eurogroup meetings during which Greece faced off against the rest of the eurozone can have been as conflicted as Harris Georgiades, the Cypriot finance minister....There are big differences between the Greek and Cypriot crises both in scale and scope. The proximate cause of the former was debt while for the latter it was a damaged banking sector – the assets of Cypriot lenders equated to a staggering 703% of GDP in 2012....

- US Employers added 215,000 jobs in July and the unemployment rate held at a seven-year low of 5.3 percent, signs of further progress in the U.S. labor market that’s keeping the Federal Reserve on the path toward raising interest rates as soon as next month. The gain in payrolls last month followed a 231,000 advance in June that was bigger than previously estimated, a Labor Department report showed Friday in Washington. While the data also showed a pickup in hours worked, average hourly earnings climbed a less-than-forecast 2.1 percent from a year earlier, indicating little momentum in wage growth...

- Gold prices are softer for a seventh consecutive week with the precious metal off by just 0.10%.

- Oil Predominantly Drills Into Canadian$. As oil prices have taken a further fall, they’ve dragged the Loonie along for the ride. No real surprise there, after all the two are historically very highly correlated. What is somewhat of a surprise is how much higher the correlation has been recently when compared to other oil sensitive currencies such as the NOK, BRL and MXN. That partly reflects the fact that current levels of oil prices have had a greater impact on Canadian growth and monetary policy. However, so long as oil prices don’t fall further, or even see a modest rebound, and Poloz stays on the sidelines, it could also be a sign that the Canadian$ will regain a bit of ground against such currencies.

- Watch today: EU Sentix, US yields, US labor markets.

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