AUD/USD: Sell the rallies on global trade concerns – Morgan Stanley

In its latest client note, analysts at Morgan Stanley argue that the AUD/USD pair remains exposed to downside risks amid threats to global trade and a better outlook for the US dollar.

Key Highlights via Bloomberg:

“AUD vulnerable to slowing economy, threats to international trade, rising U.S. funding costs and neutral positioning on AUD means further selling will have an impact.

Meanwhile, USD should be supported by robust US growth, positive earnings momentum.

More so, growth, trade concerns may weigh on investment and liability flows from the US, leading to USD strength.

Trading Strategy: Short AUD/USD at 0.7770, target 0.6900 and stop 0.7910

Risk to the trade is that global funding flows accelerate, leading to USD weakness.”