Morgan Stanley strategists say the dollar could weaken over the next few months
if risk appetite recovers while the Fed refrains from further rate hikes. They
caution that without U.S. rate increases, improved risk sentiment tends to weigh
on the dollar, though stronger U.S. growth prompting larger Fed hikes than other
central banks would support the currency. With the ECB and BOJ both expected to
raise rates this month, narrowing rate differentials should lift risk appetite
and add downward pressure on the dollar.
