Morgan Stanley Sees Euro Sliding 7% on Risk of Big ECB Cuts
- US bank’s FX strategy head forecasts euro-dollar near parity
- Says growing political risk, economic weakness will drive move
Money markets are currently wagering on about 60 basis points of easing in Europe this year.
Photographer: Tomohiro Ohsumi/Bloomberg
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Morgan Stanley sees the euro sliding toward parity with the dollar within months on the risk markets move to price in more aggressive policy easing by the European Central Bank to tackle a faltering economy.
The US bank expects the single currency to slump to $1.02 by year-end, a roughly 7% depreciation from current levels, its head of Group-of-10 foreign-exchange strategy David Adams said in an interview. That view rests on markets betting the central bank will press ahead with interest-rate cuts at its next three meetings, along with the potential of a jumbo half-point move.