Wall Street Banks Reckon the Dollar Must Fall. Traders Don’t Agree
- Options show dollar bulls take Fed’s new dovishness in stride
- Risk reversals at seven-week high despite analyst bearishness
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As a growing chorus of analysts from the likes of Morgan Stanley and Nomura predict dark days for the dollar, the market is telling a different story.
The U.S. currency has rallied almost 1 percent since the day of the surprisingly dovish Federal Reserve meeting in January, erasing all of its 2019 loss. And the outlook is actually getting stronger, based on the options market. Contracts that appreciate if the dollar rises versus its major peers over the next three months are near their most expensive level since mid-December relative to hedges guarding against a drop.