MS says that within the G10 the AUD remains the most vulnerable, followed by NZD
Morgan Stanley cite:
combined pressure of a rising USD and higher yields
AUD and NZD to stay under pressure unless US asset volatility rises, oil begins to underperform, or US economic data begin to weaken (and the ISM nonmanufacturing survey surging to a 20-year high suggests this last outcome is unlikely for now)
On October 4 MS re-entered a long GBP against AUD
AUD remains on a bearish trajectory as rising global funding costs make AUD particularly vulnerable to a pullback given its sensitivity to US wholesale funding costs
Australian data continue to worsen, particularly relating to the housing market
GBP should continue to gain, though, as political momentum toward a Brexit deal remains
Oil prices staying supported also bolster GBP
UK real yields continue to rise due to a combination of continued gradual normalization and data remaining robust
Source: Forexlive
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