Morgan Stanley: If US inflation falls below expectations, the dollar may decline.

Morgan Stanley strategists stated in a report that historically, after a strong non-farm payroll report, if inflation data is lower than expected, it could lead to the largest decline in the US dollar. "In this combination, the decline in the US dollar indicates that strong signals of US growth without increasing inflation pressure are a 'blonde girl' combination for risk appetite." These strategists said that this would support risk-sensitive currencies to strengthen against the US dollar. They also suggested that the situation in the inflation swap market implies that the January inflation report, to be released at 1330 Greenwich Mean Time, may be lower than expected. Before this, Wednesday's non-farm payroll data was stronger than expected. The DXY dollar index is up 0.15% to 97.07.