Morgan Stanley’s Redeker Plans ‘Substantial’ Euro Forecast Cut on Greece

Hans Redeker, who was hired as Morgan Stanley (MS)’s head of foreign-exchange strategy in March, said he plans to revise the bank’s euro forecast “substantially lower” on weak demand for European bonds and equities.

“Net flows into the longer-term bond segment are near historical lows and at odds with the current value of the euro” amid the Greek debt crisis, Redeker wrote in a research report dated yesterday. “European equity markets have lost ground. The relative underperformance compared to the U.S. market indicates that long-term capital flows should remain euro-negative.”

Morgan Stanley’s current estimates for the euro are that the 17-nation currency will rise to $1.52 by the end of the third quarter, then trade at $1.49 and $1.47 at the end of the fourth quarter and the first quarter next year respectively. “We will take these numbers substantially lower,” Redeker said in an e-mailed response to questions today.

The euro was 0.3 percent stronger at $1.4452 as of 8:50 a.m. in London.

“While short-term yield differentials correlate best with euro-dollar, we regard it as a mistake to ignore messages sent out by other market segments,” he wrote in the report. “Should nervous euro money-market investors turn around, the euro will fall.”

Morgan Stanley said on March 31 that it hired Redeker from BNP Paribas SA as managing director and global head of foreign- exchange strategy. The bank also hired Ian Stannard from BNP Paribas as head of European foreign-exchange strategy. Both will be based in London.

To contact the reporter on this story: Paul Dobson in London at

To contact the editor responsible for this story: Daniel Tilles at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.