MS: why AUD/USD will reach parity
Analysts at Morgan Stanley are bullish on Australian dollar in the long term. In their view, AUD/USD will reach parity by the end of the year. The specialists justify their forecasts with higher interest rates in Australia and the nation’s top credit rating.
According to Morgan Stanley, investors from Europe, the US and Japan will want higher yields (reasonable expectations, taking into account the ECB’s stimulus efforts), so they’ll buy Australian bonds. This happened in the past: foreign buying of Australian dollars drove this currency up in 2010 and 2011 regardless of Australian economic fundamentals.
In particular Morgan Stanley claims that Japanese buyers have recently bought “$10.9 billion of AUD assets, having previously sold AUD 34.2 billion in the 11 months ended September 2013”.