Goldman Sachs: dollar's value usually rises with US Treasury issuance

Goldman Sachs said the value of the dollar typically rises as U.S. Treasury issuance increases due to the dollar's "prerogative" as the world's reserve currency. Controlling for other factors, there is a "significant" positive correlation between U.S. Treasury issuance and the nominal trade-weighted value of the U.S. dollar that is not seen for the euro, a classic example of the dollar's over-privilege, writes Goldman's macro strategist Isabella. Isabella said that the dollar benefits from stable foreign demand for US assets. Finally, she argued that bond issuance has been a secondary driver of the dollar's performance this year, relative to the Fed's rate cuts.