China’s Soft Landing in Sight but Aussie and Kiwi Traders Prepare for a Crash

January 27th, 3:41 pm by Barbara Zigah

(eToro Blog) An adviser to the People’s Bank of China said that the slowing economic growth means that the government is likely to have successfully orchestrated the soft landing for which it has been aiming. Inflation is expected to ease from 2011’s 4.5% to about 3% this year, and some analysts believe that the central bank might move to cut reserve requirements at any time now. Though not yet officially confirmed, a handful of China’s largest banks have apparently been given the green light to boost lending this quarter, perhaps even up by 5% as compared to last year’s lending limit.

The slowing down of both growth prospects and inflation allows the central bank some policy leeway and can be seen as good news for those countries like New Zealand and Australia, and others in Asia and elsewhere in the world, which rely heavily on the world’s second largest economy. OpenBook guru robepu continues to be bearish for both the AUD/USD and NZD/USD pairs with several open shorts for both; following the RBNZ rate decision this trader closed out two shorts for gains of 7.46% and 14%.

Trader mutterbox, who started trading on OpenBook late last year and has less than a handful of followers, has recently shown some solid analysis in his Kiwi and Aussie trades; with a medium risk strategy, this well-diversified trader earlier closed out two long positions in the NZD/USD pair for 41% gains each, as well as 31% respective gains for each of his two AUD/USD longs.

Currently the AUD/USD pair is trading higher at 1.0660 and guru pyruss points out that it is facing strong resistance that could create some selling pressure. He has one open short in the pair and is watching the U.S. GDP announcement which will be released later today. Traders of the Kiwi and the Aussie Dollars have seen those currencies continue to rise, even in the face of a global growth slowdown, though sentiment among the OpenBook traders is decidedly bearish, an indication that they expect the bubble to burst soon.