Oil Prices Hold Steady as Ukraine Tensions and Fed Cut Expectations Support Market 
European Stocks Rise as Markets Await Key U.S. Inflation Data 
U.S. Futures Steady as Rate-Cut Bets Rise on Soft Labor Data 
Gold Prices Steady as Markets Await Key U.S. Data and Expected Fed Rate Cut 
Dollar Holds Steady as Markets Shift Focus to 2026 Rate Cut Expectations 
Asian Currencies Steady as Rupee Hits Record Low Amid Fed Rate Cut Bets 
Asian Markets Mixed as RBI Cuts Rates and BOJ Signals Possible Hike 
Asia’s IPO Market Set for Strong Growth as China and India Drive Investor Diversification 
Germany’s Economic Recovery Slows as Trade Tensions and Rising Costs Weigh on Growth 
Asian Markets Stabilize as Wall Street Rebounds and Rate Concerns Ease 
Japan’s Nikkei Drops as Markets Await Key U.S. Inflation Data 
Asian Currencies Edge Higher as Markets Look to Fed Rate Cut; Rupee Steadies Near Record Lows 
Australia’s Economic Growth Slows in Q3 Despite Strong Investment Activity 
Oil Prices Rise as Ukraine Targets Russian Energy Infrastructure 
RBI Cuts Repo Rate to 5.25% as Inflation Cools and Growth Outlook Strengthens 
Gold Prices Edge Higher as Markets Await Key U.S. PCE Inflation Data 
Morgan Stanley analysts believe the recent decline in the U.S. dollar is not the end but merely a pause, forecasting continued weakness through 2027. In a recent note, the bank argued that the EUR/USD level of 1.17 marks an intermission, not a finale, suggesting more depreciation is ahead.
The strategists, led by David S. Adams, expect the dollar’s drop to have only a modest short-term impact on the U.S. economy. Their models estimate a 1% decline in the dollar could boost headline CPI and GDP by about 5 basis points. Core inflation remains largely unaffected, and the U.S.’s relatively closed economy shields it from severe currency-driven trade shocks.
However, the weaker dollar could significantly benefit U.S. multinational corporations, particularly those with substantial foreign revenue. Currency translation effects are likely to boost earnings for large-cap firms in Tech, Materials, and Industrials. Morgan Stanley identified high-quality stocks with over 15% foreign revenue and Overweight ratings, including Microsoft (MSFT), Salesforce (CRM), ExxonMobil (XOM), Procter & Gamble (PG), and Mastercard (MA).
The FX trend may also influence corporate hedging strategies. Companies often raise hedge ratios when the dollar strengthens, but a softening dollar could reverse this, potentially accelerating further USD weakness. The dollar remains at the upper end of historical ranges, and reduced hedging may amplify its decline.
Additionally, the dollar’s depreciation could lower the U.S. share in global equity and bond indices, decreasing passive investment inflows. While the Federal Reserve is not expected to respond aggressively to currency movements, Morgan Stanley anticipates a gradual shift toward a more dovish stance over time, driven by evolving macroeconomic conditions rather than FX alone.
