Morgan Stanley Sees Dollar Weakening in Coming Months if Risk Appetite Improves

Morgan Stanley strategists said the U.S. dollar could weaken in the coming months if risk appetite rebounds and the Federal Reserve avoids raising interest rates. According to Jin10, the strategists said that when interest rates are not rising, stronger risk sentiment tends to be negative for the dollar. They added that the dollar would be more supported if the U.S. economy outperforms other countries, leading to larger rate increases than elsewhere. The report also said that with the European Central Bank and the Bank of Japan expected to raise rates this month, a narrowing interest-rate differential should encourage risk appetite and put pressure on the dollar.