Forex News

US dollar has room to rally further – Morgan Stanley

2024.11.12 06:02

US dollar has room to rally further - Morgan Stanley

Investing.com – The US dollar has benefited from the country’s recent election results, and Morgan Stanley (NYSE:) expects more strengthening ahead as the new Trump administration starts to enact its proposed policies.

At 05:40 ET (10:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.3% higher to 105.802, its highest level since the beginning of July.

“The final results of the US election have not yet been confirmed, but it seems reasonable to us to think that a Republican sweep appears likely,” analysts at Morgan Stanley said, in a note dated Nov. 11. 

“Our work ahead of the US election framed a Republican sweep as the most positive outcome for the US dollar and we reconfirmed our expectation for a dollar rally” last week.

The bank’s expectation for the dollar to rally is based on three main reasons:

Pricing of tariff risks: Client conversations ahead of the US election revealed a wide range of views on the likelihood of tariffs being implemented. We believe that Republican-proposed policies on tariffs should be taken seriously and, should newsflow confirm their likelihood, we would expect investors to respond by buying USD, particularly against the currencies of economies most affected by any tariffs. 

Better data and higher UST yields: Our US rates team has raised the possibility of higher UST yields into year-end, driven by better data now that the US election is behind us and hurricane season is unlikely to weigh on payroll growth. This would support USD broadly.

Upside risks to USD on fiscal policy: The Morgan Stanley baseline view for fiscal policy changes in a Republican sweep is for an extension of the TCJA, meaning that the impact only occurs in 2026 and does not imply significant fiscal stimulus considering that it simply extends the status quo. Given the limited impact we see, the risks are likely to the upside for the market.

“The sequencing in particular is important. If the prospective administration focuses on tariffs early and also brings forward fiscal support to have an impact in 2025, then we think the USD impact will likely be larger, earlier,” Morgan Stanley added.

 



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 90,445.23 2.78%
ethereum
Ethereum (ETH) $ 3,190.83 1.80%
tether
Tether (USDT) $ 1.00 0.13%
solana
Solana (SOL) $ 215.13 1.40%
bnb
BNB (BNB) $ 620.51 0.92%
dogecoin
Dogecoin (DOGE) $ 0.399206 4.34%
xrp
XRP (XRP) $ 0.691247 2.50%
usd-coin
USDC (USDC) $ 0.999715 0.01%
staked-ether
Lido Staked Ether (STETH) $ 3,187.39 1.61%
cardano
Cardano (ADA) $ 0.579113 0.49%
tron
TRON (TRX) $ 0.177144 6.23%
shiba-inu
Shiba Inu (SHIB) $ 0.000026 3.75%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,768.53 2.28%
avalanche-2
Avalanche (AVAX) $ 33.15 2.58%
the-open-network
Toncoin (TON) $ 5.27 4.16%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 90,262.18 2.80%
sui
Sui (SUI) $ 3.29 1.48%
weth
WETH (WETH) $ 3,192.57 1.78%
pepe
Pepe (PEPE) $ 0.000021 46.68%
bitcoin-cash
Bitcoin Cash (BCH) $ 439.47 1.20%
chainlink
Chainlink (LINK) $ 13.46 4.31%
polkadot
Polkadot (DOT) $ 5.09 4.43%
leo-token
LEO Token (LEO) $ 7.62 3.48%
near
NEAR Protocol (NEAR) $ 5.17 3.62%
aptos
Aptos (APT) $ 11.69 5.63%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,359.82 1.68%
litecoin
Litecoin (LTC) $ 75.44 2.49%
usds
USDS (USDS) $ 1.00 0.20%
uniswap
Uniswap (UNI) $ 8.64 4.15%
crypto-com-chain
Cronos (CRO) $ 0.172778 2.36%
dogwifcoin
dogwifhat (WIF) $ 4.19 26.67%
internet-computer
Internet Computer (ICP) $ 8.50 4.27%
bittensor
Bittensor (TAO) $ 537.97 6.02%
stellar
Stellar (XLM) $ 0.124295 8.46%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.27 8.12%
ethereum-classic
Ethereum Classic (ETC) $ 22.09 3.69%
dai
Dai (DAI) $ 0.999734 0.09%
whitebit
WhiteBIT Coin (WBT) $ 22.39 2.55%
kaspa
Kaspa (KAS) $ 0.127798 7.45%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.04%
blockstack
Stacks (STX) $ 1.96 4.28%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.376029 6.37%
render-token
Render (RENDER) $ 7.02 3.61%
monero
Monero (XMR) $ 150.02 1.08%
okb
OKB (OKB) $ 43.67 3.31%
bonk
Bonk (BONK) $ 0.000038 2.22%
aave
Aave (AAVE) $ 173.23 4.02%
filecoin
Filecoin (FIL) $ 4.07 3.82%
arbitrum
Arbitrum (ARB) $ 0.612255 3.76%
mantle
Mantle (MNT) $ 0.707208 4.05%