Investment Bank Forecasts For AUDUSD (Comments from WestPac and Morgan Stanley)

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Forex Analysis and Trade Strategy

It is a good idea to review what the investment banks are saying about the currency pairs you are trading.  Whether you want to believe them is another question but we like the work that is done by many investment banks.  WestPac and Morgan Stanley are two institutions that we respect.  Below are a few tidbits the two banks.  Following the two quotes we have a table of other institutions’ AUDUSD forecasts.  We think AUDUSD is going lower and will be around .70 by the end of the year.

WestPac stated in its weekly report that a cut is probable for August:

“We expect that cut will be delivered in August following the release of the June quarter inflation report. Inflation has become the most important policy driver as a result of this decision and we do not expect that the June quarter report will provide the Bank with sufficient comfort around the inflation outlook.”

Morgan Stanley said last week:

“The recent sharp fall in iron ore and rebar prices have shown that commodity prices are overstretched due to speculative activity and more correction can come, which will weigh on the AUD. The rebalancing of Australia’s economy from the highly paid mining sector to lower-paying services sector have reduced wages and inflation expectations, paving the way for more rate cuts by the RBA. We stay bearish on AUD and like selling against JPY and USD.”

AUDUSD   Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
CommerczBank          0.73          0.73          0.75          0.76          0.77
HSBC          0.71          0.70          0.70              –              –
NAB          0.74          0.71          0.69          0.69          0.70
ScotiaBank          0.72          0.70          0.70          0.72          0.72
BMOCM          0.72          0.70          0.71          0.72          0.73
Morgan Stanley          0.74          0.73          0.71          0.70          0.68
CitiBank – HK              –          0.80              –          0.82              –

 

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