Investors have begun to flee the euro in preference for the U.S. dollar amid fears that the European debt crisis may worsen, Morgan Stanley’s Global Head of Foreign Exchange Hans Redeker said in an interview in the Handelsblatt.
Hans Redeker , who was hired as Morgan Stanley’s head of foreign-exchange strategy in March, said he plans to revise the bank’s euro forecast “substantially lower” on weak demand for European bonds and equities.
The euro, which reached a two-year high versus the dollar this month, is poised to extend its gains as the European Central Bank’s audit of the region’s financial system encourages lenders to repatriate overseas assets.
Morgan Stanley, which advised clients to sell the dollar just before it tumbled to a four-month low in June, has rejoined U.S. currency bulls on optimism that the world’s largest economy will recover faster than peers.
The dollar strengthened versus the majority of its most-traded peers amid expectations the Federal Reserve will reiterate plans this week to reduce stimulus if economic performance continues to show signs of improvement.