Morgan Stanley Feels Weaker Japanese Economy Should Benefit Dollar/Yen

In a note Friday morning, Morgan Stanley recommended going long the US dollar versus the Japanese yen (USD/JPY ).

The firm feels that the market is understating the potential for further easing by the Bank Of Japan, especially in light of recent weakness in the Japanese economy. Second quarter GDP contracted 6.8 percent, and Morgan Stanley thinks that third quarter Japanese GDP will be weaker as well.

The firm set a price target of $106, above the yearly high of $105.43. USD/JPY traded recently at at $102.58.