In a note I posted on last week from Morgan Stanley on the Australian dollar the bank said they "maintain strategic short in AUDUSD, looking for a meaningful downside correction"
Nice. Post is here: Morgan Stanley on AUD/USD
The bank is out with more now, ahead of the inflation data due today. Firstly, on the US dollar:
USD should stay in a relatively outperforming position
- US corporate earnings remain strong
- inflation concerns may continue to help the US yield curve steepen
This'll weigh on the AUD, in addition too ... MS in more detail (bolding mine):
- markets focused on inflation concerns
- currencies (of countries) with high debt levels and are dependent on foreign funding like AUD should come under selling pressure in particular
- Domestic data continue to be lacklustre, most recently evidenced in the recent employment report, which should keep the RBA on hold until next year and limit AUD upside pressure
- our economists expect the headline CPI release this week to come in slightly higher than market expectations, they see underlying inflation as remaining subdued, suggesting little change to the RBA outlook. We also note that inflation in most places globally has disappointed market expectations
MS still recommend selling AUD, targeting 0.7160 buit do caution on the risk: is a strong rally in risk appetite.
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Coming up from Australia today ... Due at 0130GMT
