Morgan Stanley sees the Australian dollar substantially lower in revised forecasts for 2013:
We remain bearish AUD, and note that despite a fairly robust set of Chinese data over last weekend, AUD failed to make any substantial gains. Indeed, the end of the commodity super cycle and a slowing domestic economy are likely to weigh on the currency, despite signs of improvement in Asia. Our economists look for the RBA to cut 25bp by year-end, and we will be looking for any signs of dovishness in the upcoming RBA minutes.
They see the dollar at 0.99 in Q1, 0.92 in Q2, 0.90 in Q3 and 0.88 in Q4.
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Clearly they do not see rate cuts priced into the currency. Let’s hope they are right.