China is rebalancing its economy and this is having a clear impact on Chinese growth, as seen in yesterday's HSBC flash manufacturing PMI

China is rebalancing its economy and this is having a clear impact on Chinese growth, as seen in yesterday's HSBC flash manufacturing PMI. There are other factors that are causing negative sentiment such as a potential default in a certain investment trust; however one thing is clear the AUD is being sold by money managers to hedge emerging market risk. Technically there isn't much reason to be long and shorts are clearly preferred, although a daily close (09:00 AEST) above Monday's low of 0.8756 would be modestly positive. A sustained break of this level would bring the 50% retracement of the 2008 to 2011 bull trade into play. Long GBP/AUD still in my preferred play despite being over owned and overbought.