The weekend provided no respite for world markets, with the Australian dollar roaring ahead at 1.10 US cents this time last year now sank to its knees on the back of further weakened forecasts coming out of the United States and downplaying on manufacturing out of China.
The Australian Dollar dipped to its lowest point against the USD in almost 8 months over the weekend.
The Aussie Dollar skittered further backwards, touching 96.36 US cents after what has now become an almost record breaking run of outs, with 5 consecutive weeks of losses against the Greenback.
It has been a tough time for the resource-rich economy, which, while benefiting from consistent Asian demand for resources, led by China and India, has now a multi-polar economy, with key industries wallowing in stagnation, while the mining and energy sectors leave all else behind.
May was a bloodbath for the Australian stock market, shedding over US$100-B, a figure which represents the total 2-way trade for Y 2011 with key economic partner China.
Jitters have followed from resource sectors on both sides after Australian Prime Minister Julia Gillard told the country's miners last week that her government would only sell (miners) the right to mine the resource, a resource we hold in trust for a sovereign people.
You don't own the minerals, I don't own the minerals. They own it and they deserve their share, she said, consequently prompting sell-offs and recriminations across the market.
With north American and European markets close to free-fall after Friday's weaker than expected (8.2%) US jobs figures, Australia's ASX-200 is expected to follow suit, with an ominous sense of dj-vu sucking what little oxygen has been filtering through to Sydney.
JP Morgan said the main reason for its forecast change is the deterioration in financial and economic conditions offshore. Those unemployment numbers are the worst in over 12 months for the limping US economy and come on the back of a 7.3% loss for the ASX-200.
Mr. Walters noted, In recent days, our colleagues have pushed through material growth downgrades for the US, China, other economies in Emerging Asia, and key economies in Latin America, including Brazil.
These follow earlier downgrades for China and Europe. Weaker growth in our major trading partners will affect Australia via the immediate and most obvious channel of compromised trade flows, he said.
The grim outlook and despondent mood coming out of Sydney will further nudge the Reserve Bank of Australia (RBA) toward a cash rate cut, when the bank meets to set interest rates again Tuesday.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.