USD/JPY: Morgan Stanley says current downturn offers a medium-term buy opportunity

Morgan Stanley remains bullish on the USD/JPY and believes that the current downturn provides a good buying opportunity on the forex.

"We remain bullish on the USD/JPY and see the current downturn as a buying opportunity. The publication of solid 6.7% Q3 GDP growth figures in China should help this trade. For the first time in five years, prices of Chinese production were back in positive territory, and with the basic effects and higher raw material prices, we believe that the Chinese PPI will remain solid for now and probably reach 1.5% at the beginning of next year.

Add to that the debate regarding the replacement of monetary stimulus by fiscal stimulus and US governors evoking a steeper yield curve, and the situation is clearly bullish for the USD/JPY."

Morgan Stanley has placed an limit buy order on the USD/JPY.