Wall Street investment bank Morgan Stanley (MS) has turned bearish on the U.S. dollar and is telling investors to sell the world’s reserve currency.
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Analyst David Adams says that markets expect the value of the U.S. dollar to continue rising in the foreseeable future compared to rival currencies such as the Euro. In a report titled “Time to Sell,” Adams takes a contrarian view of the greenback and warns that investors holding the U.S. currency should offload it.
The Morgan Stanley analyst writes that bullishness surrounding the U.S. dollar is being driven by expectations for more growth from the American economy and potentially new tariffs under the administration of president-elect Donald Trump. However, Adams states that “much of the ‘good news’ for USD” is already price in and the currency is headed for a fall.
Buy British Pounds
Morgan Stanley’s currency analyst says that investors might also be “overestimating the speed, breadth and magnitude” of the shifts to U.S. trade policy under Trump. “While trade policy announcements could come relatively quickly, their implementation is likely to be slower and their scope narrower than many investors seem to expect, with trade restrictions largely focused on China,” he writes in the report.
The analyst adds that investors should bet against the U.S. dollar by buying British pounds and Australian dollars, each of which are less exposed to global trade tensions and trading near historical lows. Adams adds that he believes most of the “bad news” for the Euro has already been priced in and that the Eurozone currency is also likely to rise during 2025.
MS stock has gained 44% this year amid a rally in bank stocks.
Is MS Stock a Buy?
Morgan Stanley stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on eight Buy, 10 Hold, and no Sell recommendations issued in the last three months. The average MS price target of $129.08 implies 0.15% downside risk from current levels.
