Latin America most exposed to any US ban on diesel exports, Goldman Sachs says
Goldman Sachs' assessment highlights Latin America's vulnerability to potential US diesel export bans, framing a scenario that could significantly impact regional economies reliant on these supplies. This insight underscores the broader implications for global energy markets and related currency movements, particularly as elevated energy prices are likely to amplify inflationary pressures. The potential restriction could support the USD by reducing dependency in Latin America, but the magnitude of this effect hinges on the actual policy shifts and timing.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). Goldman Sachs' view aligns with expectations of increased USD demand due to potential supply disruptions, while other firms like JPMorgan and ING share a similarly bullish stance on the dollar's trajectory.
How firms align
Goldman Sachs is projecting a bullish scenario for the USD as a result of its diesel export restrictions forecast, targeting 1.12 in the near term. Meanwhile, BofA’s more cautious view puts their target at 1.04, indicating a divergence in expectations among market participants reflected in our reports on firms' positioning.
What the data shows
Current forecasts emphasize that any tightening of US diesel supplies could create upward pressure on prices, affecting currency valuations. For further analysis, see related insights in our database including /research/diesel-export-impact.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01US diesel export curbs could bolster USD through supply chain vulnerabilities.
- 02Market sentiment tilting towards USD strength amid potential policy shifts.
- 03Watch for developments in US energy policy as a catalyst for USD movements.
Market implications
Traders should closely monitor US policy announcements regarding diesel exports, which could influence USD liquidity and related currency pairs. Significant levels to watch are 1.0700 for support and 1.1200 as resistance, aligned with our consensus target.
Risks to this view
Should the US government decide against imposing export bans, or if Latin American economies adapt swiftly to alternative energy sources, the bullish outlook for USD may be challenged. Additionally, a rapid drop in global crude oil prices could also negate the supply concerns driving demand for the dollar.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.30
Firms mentioned
Sources & References
How we cover this story
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