Morgan Stanley still thinks AUD will go down

The bank noticed a certain correlation with the fundamentals and mentioned in its analysis:

• The correlation between the Australian dollar and the US interest rates has become positive, as the link between the currency and global risks. The macro situation in which the risk appetite further weakens and the Fed's balance continues to shrink faster than expected, in return will contribute to lower interest rates, which will negatively affect the Australian dollar
• This is particularly true in particular with the deterioration of the situation in Australia. Although CPI is above expectations, business confidence continues to weaken. The consequences of weak growth in lending and the weakening property market will begin to reflect on the economy and the currency very soon.

Undoubtedly, Morgan Stanley is right about the situation in Australia, but global mistakes may be wrong. The Federal Reserve took a dovish course, ECB is not taking action so far, which does not approach them either dovish or hawkish. The Central Bank of Japan will not deviate from its path of loosening monetary policy, and the Central Bank of England can not take any action for now, and most of all it is approaching Brexit. Globally, this transforms the macro environment into less hawkish (in terms of interest rates), which should not lead to a rise in the Australian dollar.

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