Soft data points to further weakness in Australian economy

Australian banks' survey shows that while company has given positive outlook to government and Reserve Bank of Australia's (RBA) efforts as business conditioned index improved to 11 in August from 6 in July, they are not confident that it would bring good days back for Australian economy.

National Australia Bank's business confidence dropped to 1, lowest reading in seven months.

Economic hard data indicate that Australian economy is under heavy strain, as the Chinese economy slows and its appetite for Australia's iron ore, coal, wool and natural gas wanes.

Future now looks increasingly bleak and uncertain as Chinese economy is expected to slow down further and cut back imports more, with incredible uncertainty over its outlook.

Good news for Australia is that its domestic economy is showing considerable strength, given the weakness in its mining and exports sector.

Given the scenario, any rally in Australian Dollar is likely to be seen as opportunity to go short and Aussie might reach as low as 0.65 against USD.