Morgan Stanley goes bullish on the dollar

New York (Mar 10)  In a change of view investment bank Morgan Stanley have now changed their mind on the greenback.

Matthew Hornbach, Global Head of Macro Strategy at Morgan Stanley said "Our view on the USD in 2021 has evolved from bearish at the beginning of the year to neutral in mid January, and now takes a bullish skew,".

The bank feels like the Fed are backed into a corner, they commented on this saying "The unstoppable force of the US economy is overpowering the immovably dovish communication from the Fed, and causing some cracks to emerge in the FX market, leading to USD strength,".

When it comes to the main these of bond yields at the moment, he then added "The data – and expectations about future data – are starting to dominate in the FX market in part because the Fed has signalled that it is not concerned enough about the rise in bond yields to do anything about it, inviting market participants to push bond yields higher still, pressuring the USD," says Hornbach.

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