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The investment bank Morgan Stanley issued the most severe forecast in its history: the Australian dollar will fall to 68 US cents at the end of this year, and will even continue to decline in 2016, falling to 62 US cents.

ACB News "Australia Financial Online" reported that commodity prices have fallen, central bank officials have suppressed words, and the cash rate has been lowered one after another. Under the weight of the Australian dollar in the past 12 months, the Australian dollar has fallen by 18% and has remained between the 2-76 US divisions since February. Shock.

Morgan Stanley analysts stated in a customer record on June 6, “The Reserve Bank of Australia has recently flickered its rhetoric and constantly changed its position. Huer's attitude is strong and hopes that the Australian dollar will fall, and Huer’s tendency to ease easing is to avoid achieving this effect. , Which makes the market slightly frustrated.

"But we are more optimistic in this regard. I believe that, like other central banks in major countries, the RBA's wording and position adjustments are actually striving for greater policy flexibility. This is related to the concept of attaching importance to and relying on economic data."

The Reserve Bank of Australia Governor Stevens made another "combination punch" in his speech in Brisbane this afternoon. He said that considering the economic outlook is still weak, he is still open to interest rate cuts in the future, but at the same time warned that monetary easing can be Stimulate some areas, but the overall benefits are limited and there are risks.

"The important point is that monetary policy alone cannot achieve all goals, and if expectations are too high, it will bring greater problems," he said.

Morgan Stanley expects that weak economic data will eventually force the Reserve Bank of Australia to take action and reduce the cash rate from the current 2% to 1.75% in the fourth quarter of this year. According to the Sydney Morning Herald, its analysts also said that sluggish economic data itself will put greater pressure on the Australian dollar. After the local currency falls, it will in turn support the economy through the struggling period and get out of the shadow of the cooling boom in mining.

Australia and the US economy run counter to the Australian dollar rebound?

Australia’s recent economic data is uneven, but there are too many negative news. According to the Australian National Bureau of Statistics, in the next fiscal year, the Australian business community is expected to reduce investment by 21%, mining companies’ investment willingness to decline by 34%, manufacturing companies’ investment by 24%, and other companies by 6.1%. Australia’s retail spending did not increase in April, setting the worst performance in nearly a year; the trade deficit widened to 4 billion Australian dollars that month, the highest in history.

On Wednesday, the Western Pacific/Melbourne Institute Index showed that local consumer confidence fell 6% to 6.9 points in June. The previous value had risen by 95.3%, suggesting that the federal budget’s boost to consumer confidence dissipated.

The market's bearish sentiment towards the Australian economy has grown. The investment bank Goldman Sachs took the lead in predicting that the Australian economy will fall into a recession in March this year. According to its analysis, the probability of a recession in Australia in the next 3 months is one-third.

The polarization of interest rates between Australia and the United States has become an important source of pressure for the Australian dollar to fall. The expectation of a sharp weakening of the Australian dollar is not only based on the struggling situation of the local economy, but also an important factor that supports the continued strength of the U.S. dollar.

Morgan Stanley Wealth Asset Management President Fleming (Greg Fleming) pointed out at the Reuters Wealth Management Summit in New York on Tuesday that he believes that the US Federal Reserve (Federal Reserve/FED) will begin to raise interest rates in September and may be twice before the end of the year. Raise interest rates.

The US economy has shown a good momentum of recovery. The recent US employment and housing data have shown a strong growth momentum. Morgan Stanley expects the results of its retail sales data released on Thursday will also benefit the US dollar.

Morgan Stanley’s judgment is currently the most aggressive forecast. According to Bloomberg, analysts’ median estimate of the AUD/USD exchange rate was 74 cents before the end of this year and 2016 cents at the end of 76.

Article reprinted from ACB News "Australia Finance Online"


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