Morgan Stanley is bearish on the yen and optimistic about commodity currencies

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智通财经2026/09/25 09:36

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In a report released on September 23, Morgan Stanley pointed out that the continued flattening of the US yield curve and the rise in real interest rates support a trend that favors the US dollar.
However, the bank maintains a neutral stance on the US dollar itself, believing the market has already priced in much of the expected moves and is reluctant to chase the US dollar index higher. Even if the Federal Reserve raises rates in September and more hikes follow, the window for US dollar weakness is considered closed.
Regarding the euro against the US dollar, the bank holds a neutral to slightly neutral view, believing that rising US rates and increased negative political risk premium in the eurozone make further upside in the euro more challenging. They prefer to express a bearish euro outlook through cross currency pairs rather than directly shorting EUR/USD.
The pound is also rated neutral but with a slightly bearish bias. The bank believes there is ample room to accumulate negative risk premiums for the pound ahead of the UK budget, although the high interest rate differential may limit downside.
The most significant change is in the yen, where Morgan Stanley has shifted to a bearish stance in both view and bias. The rationale is that global risk appetite, Japan's trade conditions, and the pricing of the US terminal rate all support further weakening of the yen.
The franc remains neutral with a slightly bullish bias. The fair value of EUR/CHF is seen as below spot, but the unfavorable yield differential trend combined with resilient risk demand supports franc carry trades, making the situation complex.
On commodities and high-beta currencies, the bank is more optimistic. The Norwegian krone is neutral to slightly bullish, supported by leverage to the energy market, stable domestic fundamentals, and high-yield attributes. The Norges Bank's hawkish stance this week and market pricing in slightly above 50% probability of a hike will reinforce this logic.
The Swedish krona is rated slightly bullish. The bank notes the domestic picture is favorable, but the external environment continues to limit its performance.
The Australian dollar is also rated slightly bullish. Morgan Stanley expects the AUD to outperform as investors seek carry returns from resilient commodity-exporting economies.
The New Zealand dollar remains neutral, with growth expectations unstable, housing prices at post-pandemic lows, and yields on the low side, which may allow the AUD to retain the upper hand over the NZD.
The Canadian dollar is neutral. The bank warns the market may be overpricing about 14 basis points of rate hikes for the Bank of Canada's October meeting, which contrasts with the higher terminal rate priced in for the Federal Reserve after the September hike.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Morgan Stanley is bearish on the yen and optimistic about commodity currencies

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