Morgan Stanley Trade Of The Week: Sell AUD/JPY Targeting 82
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Currency investors should consider selling AUD/JPY this week, advises Morgan Stanley in its weekly FX pick to clients this week.
"With risk appetite declining and a range of risk events at year-end that could trigger China’s December Caixin PMI eased to 48.2 from 48.6. It has stayed below 50 since April, suggesting the contraction of China’s manufacturing sector to increase from here.
China’s People’s Daily runs an article stating that “traditional Keynes theory has its limits”, urging structural reform. Weakness in the non-oil commodity sector combined with increasing RMB depreciation would not bode well for the AUD," MS says as a rationale behind this call.
In line with this view, MS recommend selling AUD/JPY at market (currently trading at 85.75) with a target of 82.00.
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