Good news for the “overweight”? Morgan Stanley rules out that the dollar will recover in 2024 – El Financiero

Morgan Stanley, one of the few remaining dollar bulls, cut its dollar forecast due to lower Treasury yields. After the Fed's accommodative shift.

The bank changed its outlook for the dollar from bullish to neutral, but said seasonality and short selling could lead to increased gains. The bank has been betting on the strength of the dollar since at least mid-November It previously expected the spot dollar index to strengthen about 8 percent From current levels in the second quarter.

Hedge funds and banks, including Goldman Sachs Group, turned bearish on the dollar in December after Federal Reserve Chairman Jerome Powell's signal. The attitude towards interest rate cuts has changed this year. The dollar index then fell to its lowest level in five months before rising in the first four days of January.

“Our conviction in the strength of the dollar has diminished significantly,” strategists, including David Adams, wrote in a note published on January 4. “The US data slowdown has compressed growth spreads, Interest rates fell more than their counterparts Investors appear to be far from defensive based on stock returns.

Fidelity International, JPMorgan Chase & Co and HSBC Holdings Plc were among a minority of money managers who bucked the consensus in December by warning that the dollar would surprise strongly in 2024 as the US economy fares better. The majority of analysts surveyed Bloomberg We expect the dollar to weaken.

Morgan Stanley also closed its short EUR/JPY recommendation, signaling to investors Alternatively, take a short position between the euro and the yen. The bank expects that the yen will rise as US interest rates fall and that the euro will fall as the euro zone economy continues to weaken.

“The bleak outlook for the dollar does not change the fundamentals of the economy Other G3 coinsAdams confirmed.