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A Downer Outlook Down Under

Richard Woldendorp | Photolibrary | Getty Images

The Australian dollar has been sagging, and this strategist sees more weakness ahead.

Between slowing growth in China and falling commodity prices, the Australian dollar has been battling headwinds for a while. Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, thinks the challenges will continue.

"The price of iron orehas been declining rapidly in July and August," she points out, falling some 25 percent in August alone. China's slowing growth and growing inventory overhang are curbing demand for iron ore, which accounts for a fifth of all Australian exports. So that shift is weighing on the Australian dollar, "which I believe will remain quite heavy going forward," Bourdeau told CNBC's Mandy Drury.

So Bourdeau wants to sell the Australian dollar against the U.S. dollar — but not until after the Reserve Bank of Australia meets on Monday and Australia releases its second-quarter gross domestic product report on Tuesday night. After that she wants to enter the trade at $1.0400, setting a stop at $1.0530 and a target of $1.0150.

Andrew Busch, global currency and public policy strategist at BMO Capital Markets, agrees that "investors are getting a little bit nervous about Australia and their growth prospects, including their stock market." He thinks the Aussie "may not fall below parity but its gonna fall behind the other currencies."

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