LIVE MARKETS-Morgan Stanley drops long euro, yen call vs dollar

ReutersOct 31, 2025 2:59 PM

Wall Street indexes up with Nasdaq, S&P 500 outperforming the Dow
Consumer discretionary is top sector gainer, consumer staples is biggest loser
STOXX Europe 600 falls ~0.5%
Dollar rises, gold edges down, crude climbs, bitcoin up ~3%
U.S. Treasury 10-year yield edges down to ~4.085%

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.

MORGAN STANLEY DROPS LONG EURO, YEN CALL VS DOLLAR

Morgan Stanley no longer recommends going long on the euro EUR= and the Japanese yen JPY= against the dollar as it sees limited near-term negative catalyst for the dollar in the absence of official economic data.

"Our medium-term bearish view on the U.S. dollar has rested on two core drivers. First, rate compression between the US and the rest of the world. And second, a larger USD discount associated with policy uncertainty," MS strategists said in a note.

Recent developments have challenged this view as the brokerage sees reinforced market perception that U.S. rates are unlikely to decline as much or as quickly as previously anticipated.

"Our economists have flagged that risks have shifted toward fewer Fed cuts. A slower pace of rate cuts (or the possibility that the Fed is effectively done cutting) would delay the point at which USD carry becomes less punitive," the strategists said.

They believe that "the risk/reward of maintaining core U.S. dollar shorts has deteriorated," as near term dollar-negative drivers like economic data are absent due to the prolonged U.S. government shutdown.

"From a tactical standpoint, we see risk-on, positively carrying trades as the key strategy for the remainder of 2025," the brokerage said while publishing its latest trade ideas for global currencies.

The brokerage now recommends exiting long EUR/USD and short USD/JPY positions.

(Shashwat Chauhan)

EARLIER ON LIVE/ MARKETS:

NASDAQ RALLIES AS AMAZON, NVIDIA OFFER HALLOWEEN TREATS CLICK HERE

POTENTIAL FOR "ONE OF THE MORE CONSEQUENTIAL BOE MEETINGS IN RECENT MEMORY" CLICK HERE

WHITHER EUROPEAN BANK STOCKS? CLICK HERE

STERLING CREDIT LOOKING CHEAP AHEAD OF THE UK BUDGET CLICK HERE

EUROPEAN SHARES SET FOR WEEKLY LOSS CLICK HERE

BEFORE THE BELL: FUTURES STEADY BUT ANOTHER MONTH OF GAINS CLICK HERE

NO TRICKS, SOME TREATS FOR MARKETS CLICK HERE

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.