Notice: Trying to get property 'display_name' of non-object in /home/theproficientinv/public_html/wp-content/plugins/wordpress-seo/src/presenters/meta-author-presenter.php on line 40
Stock

Morgan Stanley Says Markets Are Bottoming So Sell U.S. Dollar

imageForex9 hours ago (Mar 16, 2020 01:34AM ET)

(Bloomberg) — Global financial markets are now in a bottoming phase, and investors should start to add risk and sell the U.S. dollar, according to Morgan Stanley (NYSE:MS).

The tightening of financial conditions has been fast and furious, caused by a slump in stock markets and a widening of credit spreads, strategists including Matthew Hornbach in New York wrote in a report published Friday. However, support measures, mainly by central banks so far, are helping to deliver easing and stabilize the situation, they said.

“That’s not to say we’re ‘calling the bottom’ or we’ve seen the lowest prices in risk assets,” the strategists wrote. “But it is to say that we’ve entered the final phase of this severe, acute bear market. And that means we’re closer to the ‘early stage recovery’ phase than we were over the past three weeks. As such, our strategists around the world have begun suggesting the addition of risk.”

The global spread of coronavirus has roiled markets in recent weeks, causing volatility to spike and spurring a flight to haven assets, including the U.S. currency. The Federal Reserve slashed interest rates to near zero late on Sunday and announced massive bond buying, adding to the growing cavalcade of stimulus provided by central banks and governments around the world.

“The time has come to sell the U.S. dollar,” the Morgan Stanley strategists wrote in their report, which was published before the Fed’s latest action.

“We expect further U.S. dollar weakness, driven by the interrelated combination of aggressive Fed stimulus and a tactical risk rebound,” they said. “The U.S. Dollar Index may reach, if not breach, the 95 level.” The gauge dropped 0.3% Monday to 98.409 after surging 2.9% last week.

The strategists recommend buying the euro versus the dollar with a target of 1.16 and a “fairly wide stop” at 1.08 given the high market volatility. They also advocate going long the Australian dollar versus the greenback targeting 0.68 with a stop of 0.60.

“Markets have moved a lot in the past couple of weeks, with the recent 20%-plus drawdown in global equities one of the most aggressive on record,” the strategists said. “Looking across asset classes, the cost-benefit of risk taking is increasingly moving in a positive direction.”

Morgan Stanley Says Markets Are Bottoming So Sell U.S. Dollar

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:

TheProficientInvestor.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 TheProficientInvestor. All Rights Reserved.

To Top