Morgan Stanley recommend a long EUR/NOK....>

EURO-NOK: Morgan Stanley recommend a long EUR/NOK position at market with a

target of NOK9.90 & stop at NOK9.50.

- They reason that "tightening global liquidity conditions weakening the outlook

for risk assets & raising volatility does not bode well for NOK, which is the

most sensitive to risk appetite within G10 FX. Concerns about global growth

weighing on commodity prices do not bode well for NOK either. This week, the

main risk events for this trade are Norway Q2 GDP & Eurozone PMI releases, where

our economists exp. the former to come in stronger than exp. & the latter to be

in line with expectations. This may provide a temporary boost to NOK but we

suggest fading the rally. Mkts have fully priced in a rate hike by the Norges

Bank in Sep, in line with the central bank's guidance. Should there be a

volatility spike in the run-up to the Sep meeting, which we think is likely, mkt

pricing for a Sep hike could moderate, which would weigh on NOK. Markets have

already priced in about 2.5 hikes by the Norges Bank by end-2019 which, in the

absence of further guidance from the Norges Bank regarding their desired pace of

hikes, suggests limited scope for more hikes to be priced in to support NOK."