Morgan Stanley G10 FX outlook: AUD, JPY, GBP, NZD, CAD, CHF

Morgan Stanley maintains its broader G10 FX outlook, favoring AUD and JPY as top performers, GBP resilience, and NZD gains trailing AUD. They see CAD and CHF as underperformers due to trade risks and funding flows.

Key Points:

1️⃣ Top Performers: AUD & JPY

• AUD: Gains supported by positive local factors and global risk appetite.
• JPY: Strength driven by lower US yields over time and ongoing BoJ policy normalization.

2️⃣ GBP Resilience Despite Bearish Sentiment

• Elevated carry attractiveness supports GBP, even as sentiment on the UK economy remains weak.

3️⃣ NZD Gains, but Lags AUD

• NZD is set to appreciate, but will underperform AUD due to monetary policy divergence and weaker domestic outlook.

4️⃣ Laggards: CAD & CHF

• CAD: Domestic economic challenges and persistent trade risk premium weigh on the currency.
• CHF: Faces pressure as it becomes the “funding currency of choice” in G10 FX.

Conclusion:

Morgan Stanley expects AUD and JPY to lead G10 FX performance, GBP to stay resilient, and NZD to appreciate but underperform AUD. CAD and CHF are seen as laggards, pressured by trade risks and funding flows.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

This article was written by Adam Button at www.forexlive.com.