Goldman sees Dollar strength as energy prices rise, equities fall

Investing.com -- The Dollar strengthened Monday morning as energy prices climbed and equities sold off following weekend developments, according to Goldman Sachs.

The price action appeared less driven by risk sentiment and more by relative terms of trade shifts, with the Norwegian krone and Canadian dollar outperforming while the Euro and Japanese yen underperformed within G10 currencies. The South African rand and Indian rupee also showed relative strength within emerging markets.

The Hungarian forint stood out among energy importers following weekend elections. The opposition won the parliamentary elections, with Tisza set to secure a two-thirds super-majority in parliament. This gives the party the ability to swiftly pass legislation that aligns with the EU’s super milestones to unblock EU funds and paves the way to Euro adoption.

Goldman Sachs said this clearer path to a significant shift in economic policy supports sustained forint appreciation, with the currency benefitting from a decline in risk premium and improving growth and external balance outcomes.

For Hungary’s external balances, higher energy prices remain a key vulnerability, with oil and natural gas imports making up the majority of the country’s energy trade balance. Goldman Sachs estimates that current oil and gas price levels, at $103 per barrel for Brent and EUR48 per megawatt-hour for European natural gas, point to a decline in the net energy balance relative to 2025 of approximately 1.3 percentage points.

However, the disbursement of EU funds would more than offset this impact. The Recovery and Resilience Facility funds include grants worth 3% of 2025 GDP and loans worth 1.8%, while the 2021-2027 EU budget funds should amount to around 2.5% of GDP per year if disbursed regularly.

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