Falling USD has the characteristics of a pain trade that seems to have further to run

Morgan Stanley with their pain trade’ take on the US dollar

This is via eFX

"The dovish Fed – discouraging USD bulls – has led to a

de-positioning move supporting the once shunned currencies. GBP, AUD and

many emerging market currencies fall into this category.," argues Morgan Stanley…

When it comes to capital flows, other factors such as growth and

productivity differentials come into play and here the US still leads,. It

requires growth and output gap differentials shrinking. Markets may now

be caught by surprise should US data strengthen, supported by easier

financial conditions and a buoyant household sector running solid

balance sheets," MS adds.

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