Morgan Stanley sees 88 cent AUD in 2013

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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.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.