Market recovery is approaching: That's why investors Should now Sell US dollars - News-Credit-Mortgage-Coin


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Wednesday, March 18, 2020

Market recovery is approaching: That's why investors Should now Sell US dollars

The international stock markets have seen an unprecedented slump in the past few days. But Morgan Stanley analysts seem to be seeing light at the end of the tunnel again.

Central banks are fighting against recession fears
• Morgan Stanley advises selling US dollars
• The prospects for risk investments are improving

The international central banks and governments are taking decisive action to counter the effects of the corona pandemic. The German government, for example, wants to protect companies from collapse with numerous measures, including an unlimited loan program. The ECB is providing support for this, which among other things has announced that it will invest an additional EUR 120 billion in bond purchases by the end of this year. And almost worldwide, governments and monetary authorities are adopting economic aid programs.

Morgan Stanley spreads optimism

The US investment bank Morgan Stanley apparently assumes that all these measures will soon have an effect. "Bloomberg", citing a report released on Friday by the bank, reports that Matthew Hornbach and other Morgan Stanley strategists believe that these concentrated measures will help to relax and stabilize the situation.
"We are not saying that the bottom has already been reached or that we have already seen the lowest prices for risk investments," the news agency quotes from the strategists' report. "But we are now in the final phase of this violent and acute bear market. And that means that we are closer to an early stage of recovery than we were three weeks ago. That is why our strategists around the world started it "To propose to investors to add risk assets [to their portfolio] again," said the strategists.

As this report was released on Friday, the latest Fed action is not yet included. Because to counter the fears of a recession due to the novel corona virus, the US monetary watchdogs surprisingly resorted to further drastic means on Sunday. In addition to lowering the key interest rate by a full percentage point to almost zero percent, a large bond purchase program and emergency loans for banks were also announced. The US Federal Reserve had unexpectedly cut its key interest rate by 50 basis points in early March.

Morgan Stanley is now advising investors

The volatility in the markets has recently led investors to switch to safe investments, including the US dollar. But now investors should rethink again: "The time has come to sell the US dollar," say the Morgan Stanley strategists. Even before the Fed's last drastic package of measures, they were of the opinion: "We expect the US dollar to weaken, triggered by the aggressive Fed stimuli and a tactical rebound in risk investments".
Specifically, they recommend buying euros against the US dollar with a target price of 1.16 and securing themselves with a stop at 1.08. Long positions on the Australian dollar against the US dollar are also recommended, with a target of 0.68 and a stop at 0.60.
In general, the Morgan Stanley experts advise taking more risks again: "When looking at all asset classes, the cost-benefit ratio moves in a positive direction when taking risks".

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