By Aidan Meikle

Goldman Sachs, the first of a few major US banks releasing financial statements this week, has reported a net quarterly profit of $1.8bn (£1.2bn) beating analysts expectations.The bank also said it would be worth $5bn (£3.4) worth of its stock on the market, to raise funds to repay an emergency $10bn loan provided by the US government.

Along with JP Morgan and Bank of America, Goldman has made no secret of its desire to be rid of the strings attached to the government funds. These include restrictions on executive compensation, limits to dividend payouts and unprecedented scrutiny from politicians. Goldman executives have complained privately that business under such conditions is becoming “impossible”.

Several rival banks are due to report financial results later in the week and analysts will be watching closely for signs that the worst may be over in terms of the multibillion-dollar losses suffered by Wall Street over the last 18 months.

What will this mean for the dollar?  Well, there are two sides to the story.  On the one hand, a better working US bank system may invite investment, leading to dollar appreciation.  On the other hand, as the US is a major world player, a better US banking system may lead to an increase in risk appetite and therefore dollar depretiation.  The question is, which side will investors see as the more important of the two?  This will most likely decide the short term movements of the dollar.