Forecast of Lower GDP Pressuring AUD USD

The lack of confidence in Australia’sgrowth prospects has been helping to pressure the AUD USD. Traders startedselling the Aussie after reports surfaced that some economists were cuttingshort-term gross domestic product forecasts for Australiafollowing recent flooding in the state of Queensland.

The lack of confidence in Australia’sgrowth prospects has been helping to pressure the AUD USD. Traders startedselling the Aussie after reports surfaced that some economists were cuttingshort-term gross domestic product forecasts for Australiafollowing recent flooding in the state of Queensland.

Another issue facing Australia is uncertainty over the growthprospects in Chinaduring 2011. For years Australiahas been one of the strongest global economic performers. This was because ofthe huge Chinese demand for its raw materials.

Recently China has been hinting at a tightermonetary policy due to double-digit food inflation. A tighter monetary policyis likely to curtail growth in 2011.

At thistime is appears traders are merely lightening up their positions in theAustralian Dollar. Should the downturn in Chinese demand continue, however,look for the downside pressure to intensify.

Technically,the Aussie is showing signs of weakness after failing to hold a short-termretracement zone at 1.0004 to .9993. The break accelerated following apenetration of a major uptrending Gann angle.

Based on alonger-term range of .9537 to 1.0256, look for the downside pressure tocontinue with .9896 to .9812 the next likely downside target. A break into thiszone will also test an intermediate bottom at .9830. A failure to hold thisprice will be a strong sign that a serious shift in sentiment is taking place.

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James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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