Although AUD/USD bounces off a yearly low, snapping a four-day downtrend, Morgan Stanley stays bearish on the Aussie currency pair, targeting 0.7000 with a stop-loss point of 0.7800.
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Markets are pricing in excessive RBA hawkishness, with liftoff now fully priced for July 2022, compared to RBA guidance for 2024.
Higher US real yields and tighter breakevens suggest a weaker AUD. COVID-19 risks remain asymmetrically negative in Australia, particularly with the more transmissible Delta variant.
Rising concerns about global growth (as evident in the distribution of equity returns) should be AUD/USD-negative
That being said, AUD/USD fades recovery moves by the press time, around 0.7330, of early Wednesday.
Read: AUD/USD: Bearish impulsive remains intact above 0.7300 ahead of Aussie Retail Sales