Morgan Stanley Australian dollar forecast in a note to clients

  • US68¢ by the end of this year
  • 0.62 by end 2016

MS reasoning cites:

  • They expect weaker economic data
  • Expect the RBA to cut down to 1.75% (timing is in Q4 they say)
  • A lower AUD not only from Australian developments, but also stronger USD ... "The key short-term drivers of the US dollar will be growth and front-end yield differentials, which we expect to become even clearer with our team forecasting a strong retail sales figure on Thursday, adding to momentum from payrolls, housing data and the ISM."

On the RBA:

  • "there was some market frustration with the recent rhetoric from the RBA that in one breath backs hard for a lower currency but then backs away from the easing bias that would have helped achieve this outcome"
  • "We ... view the recent RBA rhetoric and positioning as one that seeks greater flexibility linked to the overarching concept of data dependancy"