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 slid to a three-week low against the yen before data tomorrow that economists said will show U.S. retail-sales growth slowed, strengthening the case against faster tapering by the Federal Reserve.
With the euro facing one of the most pivotal months in its 13-year history, traders and strategists are more divided than at any time since 2011 over whether officials will be able to keep the currency from tumbling.