Jan. 25 (Bloomberg) -- Goldman Sachs Group Inc. recommended its clients buy the Mexican peso and the Canadian dollar versus the U.S. currency, saying the Federal Reserve’s pledge to keep interest rates low reaffirms a dollar “weakening trend.”
The peso may advance to 12 per dollar from 13.019 today and the Canadian currency will rise to 95 cents per U.S. dollar from C$1.0043, analysts led by Thomas Stolper wrote in a note.
“We have argued repeatedly that the broad dollar weakness theme remains intact as a result of the still very weak U.S. balance of payments and a very dovish Fed,” the analysts wrote today. The Fed’s pledge today to keep its benchmark borrowing costs between zero and 0.25 percent until at least late 2014 “reaffirms our view that the dollar weakening trend is not over,” they wrote.
The Mexican peso remains “cheap” while the country’s balance of payments is “solid,” the analysts wrote. In Canada, policy makers may not follow the Fed in pursuing a more “proactive” monetary policy, the analysts said.
--Editor: David Papadopoulos
To contact the reporter on this story: Ye Xie in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Laura Zelenko at email@example.com;