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Goldman Sachs has recommended short positions against the U.S. dollar, arguing that the risks arising from vaccine trials and the U.S. election are skewed to the downside for the greenback.

In a note to investors Friday, Goldman analysts said they saw “low odds” for the most dollar-positive outcome by the end of the year. They named this as an electoral victory for President Donald Trump, combined with a meaningful delay to vaccine progress.

Democratic challenger Joe Biden holds a double-digit lead in most national polling and an advantage in the majority of key swing states. Goldman analysts highlighted that closely watched indicators such as event-prediction markets and public models now put the chances of a Democratic clean sweep or “blue wave” — winning the White House, Senate and House — at over 60%.

On the vaccine front, Pfizer is anticipating “conclusive readout” from the third phase of its coronavirus vaccine trial by the end of October, while Moderna has indicated that the first interim analysis of its phase three trials should be available in November.

With the risks tilting dollar-negative going into the fourth quarter, Goldman recommended two dollar short trades. Shorting a currency involves selling it with the intention of buying it back later at a lower price, thus betting on its depreciation; taking a long position means the opposite.

Reference: CNBC