“We are expecting some more upside on euro-dollar to develop,” said Ian Stannard, head of European foreign-exchange strategy in London at Morgan Stanley, which capitulated last week on its call for a lower euro.
Morgan Stanley said in a report dated Sept. 13 that it now expects the currency will rise to $1.34 by Dec. 31, rather than fall to $1.19.
“Over the years, global investors have learned that it does not pay to fight the Fed,” Holger Schmieding, chief economist at Berenberg Bank in London, said this month in an interview. “Those betting on the demise of the euro may now have to realize that the ECB is as mighty as the Fed.”
Options traders have eased bets the euro is going to fall against the dollar by year-end since Draghi hinted the ECB would purchase debt at the Aug. 2 central bank meeting.
Futures traders decreased their bets that the euro will decline against the U.S. dollar last week, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, so-called net shorts, was 93,658 on Sept. 11, compared with net shorts of 102,306 a week earlier.
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