Remarks from MS on the euro, US dollar, yen and yuan
The bank look for a weaker USD in "coming weeks". Factors to watch:
- economic data surprises in the US vs. G10
- PBOC's policy stance
On EUR:
- market too bearish on euro, overly concerned about European political risks & growth outlook
- limited scope for the ECB to ease further given bond capacity constraints
- USD topping would herald the start of a EUR rally
- EUR/USD has absorbed bearish news without dropping under 1.1510, which is constructive
on USD/JPY:
- MS look for "one more leg higher"
- to 115
- Low Japanese real yields may keep USD/JPY supported "until risk assets turn, as we expect in coming weeks, and Japan's substantial exposure to U.S. risk assets renders it vulnerable to repatriation flows"
On yuan:
- USD rally could be blunted if there's a stabilization of Chinese equities that might be a sign the USD/CNH is peaking
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MS comments via Bloomberg