Keep on selling the Australian dollar – Morgan Stanley via ForexLive

The Australian dollar is down a full cent today to 0.8520. Morgan Stanley maintains its bearish view on AUD and targets 0.84 for year-end against the USD, anticipating a further 10% decline next year to reach 0.76 by year-end 2015.

Morgan Stanley expects a negligible near-term impact on the AUD from the China-Australia Free Trade Agreement.

On the domestic factors, MS economists have downgraded their macro forecasts for Australia, highlighting stalled economic rebalancing and a deeper terms-of-trade shock which should adds to AUD bearishness.

“The domestic macro story appears to be deteriorating as well for AUD. Our Australian economists see the transition of the resource-boom-driven growth model to the East Coast Recovery stalling and have accordingly downgraded their domestic macro forecasts,” MS clarifies.

In line with this view, Morgan Stanley maintains a short AUD/USD position in its portfolio from 0.8850 targeting 84. MS also maintains another short-term trade from 0.8670.

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posted via ForexLive