Morgan Stanley look to "buy EUR/USD.....>

EURO-DOLLAR: Morgan Stanley look to "buy EUR/USD dips" and have placed a limit

order to go long the cross at $1.1600, with a stop at $1.1500 & a target of

$1.2100.

- MS noted that "the EUR has absorbed bearish news without falling below 1.1510,

which is constructive. Eurozone political noise should quieten down as

parliaments enter summer recess. EMU data have also rebounded recently, with

Germany's May factory orders delivering a strong beat to expectations. Indeed,

Eurozone's economic surprise index has picked up sharply since mid-June. The

ECB's balance sheet expansion is set to run at a slower pace from October while

a potential non-EMU-caused volatility spike may shift EMU's current account

cycling from long-term into short-term assets. Should this happen, EMU's 3.6% of

GDP current account surplus should act as a catalyst for EUR strength. EURUSD

has its best upside potential should US inflation pick up from here, bringing

volatility to USD asset markets. Our USD scorecard is pointing decisively toward

USD weakness around mid-August, suggesting our turning more cautious on USD. The

key risk to this trade is a renewed rise in Eurozone political uncertainty."