Morgan Stanley Says Traders Are Unprepared for Sharp Euro Swings

Traders are underpricing the risk of extreme scenarios potentially causing ruptures in major currencies, especially in the euro, according to Morgan Stanley’s David Adams.

These so-called tail risks are not necessarily “impossible outcomes,” yet the currency market overall seems particularly complacent, Adams, head of G-10 FX strategy at Morgan Stanley, said in an interview. That is concerning, he said.