A ‘game-changer’ for the euro – and a coming CHF bloc

Morgan Stanley’s currency expert and emerging markets strategist Stephen Jen has been quick to leap on the significance of the push to give the IMF extra funds to channel to Eastern Europe. Citing what he calls a “game changer” for forex markets – and for Europe in general - Jen has changed his hitherto bearish outlook on the euro and now thinks it’s more likely to see $1.40 next than $1.20 – a significant shift from the $1.10-$1.15 he has been looking for up to now.

In his first big shift on the euro since “the start of the global financial crisis”, Jen says the prospective $750bn-$850bn “IMF arsenal” will effectively bail out Eastern Europe and the likes of Austrian and other European banks with large exposure to those regional emerging markets: