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Where will Aussie stop its downtrend?

Thursday, Dec 25 2014
Recent Australian economic data was far from positive for Aussie.Consumer and business confidence figures are being mixed, GDP growth in third quarter was much slower than it was expected. 
 
Important factor for Aussie will be state of Chinese economy. Industrial production in China has rapidly fallen and with that demand for iron ore has dropped which is problematic for Aussie since Australia is one of the main iron ore exporters. Furthermore, gold prices have also been declining what also adds additional pressure to Aussie. 
 
However, as Reuters reports today, despite a slow-down in the Chinese economy, investment banking business has been booming. China-related deals in equity capital markets surged 69% in the first 11 months of the year compared with the same period in 2013.
 
Aussie will most certainly head to 0.80 handle and that would be our initial target. However, RBA officials are calling for even lower exchange rates with optimal price of around 0.75 handle so we believe that long-term looking this is the point where Aussie could stop its downtrend.
Last modified on Thursday, 25 December 2014
More in this category: « Will British pound manage to rebound? Aussie almost unchanged in a quite Friday's trade »

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