Morgan Stanley re-establishes long AUD/USD trade following the recent setback in the pair. Says the Chinese PMI Wednesday will be the biggest event for AUD this week.

While the consensus is for a weak number, Morgan Stanley says "if this is met with a further policy response, we would expect any AUD/USD pullback to remain limited."

Hence, it remains positive AUD over the medium term despite the current setback. The bank enters long at 1.0560 with a stop at 1.0490 and a target of 1.0890.