USD, EUR, GBP, CHF, AUD: Outlooks For The Coming Week - Morgan Stanley
USD: Fed Ends the Correction. Bullish.
The Fed surprised markets by sounding more hawkish than expected, driving a re-pricing in the probability of a December hike. We now expect a more bullish USD going forward, as investment works its way into the US. Strength is likely to be concentrated against G10 currencies and low-yielding AxJ. Going forward, data will be increasingly important for USD as a December hike is now in the balance. On that front, we will watch payrolls next week.
EUR: The Draghi Put. Bearish.
We expect EUR to be a clear underperformer in this environment. The divergence in monetary policy should encourage funding in EUR, and we think that EUR could retest lows of the year. However, we would stand by our previous assertion that a combination of ECB action, including a deposit rate cut together with further QE in a broadly risk-positive environment, would be required for sustained EUR weakness. CLick Source URL:
