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However, Goldman Sachs is not too keen on the prospect of further weakness in the yen, preferring the euro as a funding option:

  • Higher inflation and upside risk to US rates through the end of the year, all other things being equal, imply further depreciation of the yen. However, the EUR may be a better candidate for short-term funding for several reasons “
  • First, both currencies tend to depreciate when the US yield curve flattens. Second, even though real GDP growth stood at -3.0% qoq annualized in the third quarter, well below market expectations, our economists forecast strong growth in the fourth quarter of 2021.

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