Morgan Stanley Doesn't See End of the World for Europe
Morgan Stanley is one financial firm that is predicting brighter days ahead for Europe. According to Bloomberg, Morgan Stanley believes that the euro will appreciate against the Swiss franc as the debt crisis abates.
For most of May, the euro has been steadily depreciating against the U.S. dollar on fears that the debt problems in Portugal, Ireland, Greece and Spain would spiral out of control.
After Der Spiegel reported a rumor that Greece was considering abandoning the Euro, the currency declined sharply against the dollar. However, it has subsequently rallied back as European Union officials have gone out of their way to deny that such a thing could ever occur.
The outbreak of riots in Spain this week has put additional downward pressure on the currency.
Yet, despite these factors, Morgan Stanley remains bullish on the currency.
"The euro will recoup lost ground as the peripheral issues come off the boil and the ECB remains on track for more tightening this year," said Yilin Nie and Yee-Wai Chong, currency strategists for Morgan Stanley.
Those traders who believe Nie and Chong's assessment might wish to consider CurrencyShares Euro Trust (NYSE: FXE). FXE attempts to return a value corresponding to the value of the Euro and may do well if the Euro rallies.
Traders who don't agree might wish to look at ProShares UltraShort Euro (NYSE: EUO). EUO is a short euro fund that attempts to return the inverse value of the euro.
Interestingly, the report conflicts strongly with a report released by Citigroup on Thursday. Which institution has made the right call?
