Australian dollar (and some New Zealand) from the bank's weekly 'FX Pulse'
MS says that within the G10 the AUD remains the most vulnerable, followed by NZD
Morgan Stanley cite:
- combined pressure of a rising USD and higher yields
- AUD and NZD to stay under pressure unless US asset volatility rises, oil begins to underperform, or US economic data begin to weaken (and the ISM nonmanufacturing survey surging to a 20-year high suggests this last outcome is unlikely for now)
On October 4 MS re-entered a long GBP against AUD
AUD remains on a bearish trajectory as rising global funding costs make AUD particularly vulnerable to a pullback given its sensitivity to US wholesale funding costs
- Australian data continue to worsen, particularly relating to the housing market
GBP should continue to gain, though, as political momentum toward a Brexit deal remains
- Oil prices staying supported also bolster GBP
- UK real yields continue to rise due to a combination of continued gradual normalization and data remaining robust
(I posted on the MS GBP/AUD trade last week, more here)
