We have updated our privacy policy and terms & conditions. Find out more here.
0
 

Aussie Tests 1.0400 on Fears Of China Bust

By ForexJan 31, 2013 11:16AM GMT Add a Comment
 
AA
+
-
S&P Suggests China at risk of investment bust.

The Aussie dipped below the 1.0400 level once again in Asian session trade today, after a report by the S&P suggested that China's investment boom will have to cool considerably in the foreseeable future. According to S&P economists, who've come up with a model to determine the vulnerability of economies to an investment led collapse, China ranks number one on the list.

The S&P methodology compares investment spending as a percentage of GDP to real GDP and adjusts the two measures in a way that makes it possible to rank fast- vs. slow-moving economies in terms of risk. China, with 40% of its GDP tied up in investment ranks the highest in terms of risk.

Although the S&P report indicates that such imbalances may lead to a an economic collapse, at the very least it suggests that China will have to rebalance its growth towards consumption in order to avoid a possible bust. The Aussie which has been the primary beneficiary of China's infrastructure boom as the supplier of key commodities immediately sold off on the news dropping to a low of 1.0380 in late Asian trade.

Fears over the slowdown of the great "China demand" trade have dogged Aussie since the start of the year and the pair has been relatively weak as a result of those concerns. For now it appears to have stabilized near the 1.0400 level and may consolidate around the figure for the rest of the day. However, if the pair breaks the 1.0380 lows in North American session it may tumble all the way to 1.0350 as the day proceeds.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add a Comment

 

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

News Corp.
 
 
 
Are you sure you want to delete this chart?
 
 
 
Are you sure you want to delete this chart?
 
 
 

Successfully Reported

Thank you. This comment has been flagged for a moderator.
_touchLoadingMsg