Australia & China:- You Jump , I Jump

Aussie Dragged Down Under by Credit Woes, Consumer Sentiment

The continued European debt concerns and potential economic slowdown in China are weighing heavily on the Aussie Dollar. The currency has tumbled more than 800 ticks over a two-week span. Commodity prices, including the base metal sector that the Australian economy relies on, have tumbled in recent weeks on concerns that Europe is quickly losing control over the Greek situation. The extreme measures being taken by Germany, including the ban on short-selling of certain financial securities and sovereign debt, are a sign that financial policymakers may be grasping at straws, trying to stop the bleeding by any means possible. Domestically, the economic uncertainty both domestically and in China have taken their toll on the psyche of Australian consumers, as evidenced by the poorest showing in consumer confidence in over a year and a half. Australia raised interest rates for the sixth time since October of last year two weeks ago. Normally, such a move would be seen as a positive for the high yielding currency because of favorable interest rate parity. The higher borrowing costs have been cause for concern for consumers, who may be weary of opening their pocketbooks. Australian policymakers were looking for a gradual reduction in the exchange rate of the Aussie Dollar, but the sharp reduction in the exchange rate over the past two weeks may be alarming. The sharp fall in the currency could attract some value buying from investors, who may see the decline as too drastic and too quick. If Europe does manage to get a grip on their financial crisis, the Aussie has the potential to rebound sharply. On the other hand, if China continues to restrict real estate speculation and the European situation worsens, the Aussie could find itself continuing to face sustained downward pressure.

All me and my schoolmates saw was a double tops at AUD chart that usually promises a glorious death :-