MS had been looking for further weakness for the US dollar in the near term.
But have shifted the call now to neutral citing
- "an ongoing regime shift in US rates" (and the Fed could begin discussing normalisation in monetary policy as early as June this year)
- driven partly by "meaningful" fiscal expansion (The Democrat win in Georgia will result in further stimulus, MS looking for circa $1tln extra)
- also cite crowded short USD positioning
MS say they are seeking reasons to turn bullish.