"However, its ($AUD) recent demise is more about the rebounding US economy that anything else." It is also returning to a "normal" position unboosted by US economic woes, and foreign currency parked here for a while!.
The possible further reduction in domestic interest rates will certainly make it less attractive for foreign capital, whilst our unemploymrnt and debt are of low significance (in my opinion).
Another major factor is the movement into US bonds/currency after Bernanke hinted that QE would not end for some time, and calmed fears that the central bank might raise interest rates, all coupled with a glimmer of the US economy improving. Thus, as mentioned above, it is more that the $USD is strengthening /is becoming attractive, rather than the $AUD is diving.
So China's GDP is going to fall to around 7% annual increase (we should be so lucky), that is for an economy that has virtually doubled over 10 years, that will still require our raw materials:
"Despite weakening prices, total energy and resource exports 2013–14', are forecast to rise 11 per cent to $197 billion, helped by expectations of a depreciation in the Australian dollar." And remember resources are priced in $USD.
I do not think the $AUD : $USD ratio decrease will be catastrophic, but to a point that will reflect a position where the US economy is hopefully out of the doldrums, and Australia is no longer a "safe parking haven"
PS.
Australian equities are still producing some excellent FF returns, and are cheap at the moment (but rising).
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