I posted earlier on Morgan Staley and the Australian dollar:
A little more now, this in very brief:
We remain long-term sellers of AUD; however, to play for AUD weakness through AUDUSD would be impractical given the strong correlation with the HSI.
- For investors in the Asia region, we see AUDKRW and AUDJPY as good alternatives, given the two East Asia export engines are closely tied to Chinese economic activity, and hence should cancel out the co-movement with China from AUD FX cross.
- we remain engaged with short AUDJPY due to our expectation of yen appreciation.
Outside China-related factors, we expect AUD to weaken for the foreseeable future.
Risks to our short AUDJPY trades would be a revival in domestic economic strength in Australia, leading to stronger inflation and a more hawkish RBA
