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Morgan Stanley: AUD/USD targets 0.7600

Strategists at Morgan Stanley forecast AUD/USD to fall towards 0.7600 by the end of the year 2015. According to the base scenario, Reserve Bank of Australia will hold interest rates unchanged at 2.5% until Q1 2016. Probability of further rate cuts over next 12 months is now 45%.

Morgan Stanley maintains a pessimistic view on the Australian economy: “Unless the monetary and fiscal backdrop turns more stimulatory, Australia could face its first recession in 25 years”. Economic growth is expected to slow to 1.9% in 2015 before a shallow recovery to 2.2% in 2016. Unemployment forecasts have also increased. 

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