Morgan Stanley expect the NPF (specifically the unemployment rate) to trigger a stronger US dollar

Morgan Stanley Research looks for an unemployment rate below consensus in Friday nonfarm payroll report:

• We think US real yields are set to rise while breakeven yields tighten ... a setup historically associated with widespread USD strength
• We maintain a USD-bullish portfolio of recommendations vs. EUR, CAD, AUD, JPY, and CHF. We also maintain several long USD positions in emerging markets
• We expect the June payroll report to be an important market catalyst for USD, and USD may gain if the US unemployment rate falls more than markets expect. Our forecast is for a drop from 5.8% to 5.5%, versus median expectations for 5.6%

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