It seems even the strong economies of the southern hemisphere are not immune to the actions of ratings agencies.

The Australian dollar dropped today on a combination of a downgrade of New Zealand and continuing fears about the global economy. Both Standard & Poor’s and Fitch cut their rating on New Zealand by one notch, to AA from AA+, citing high external debt and the impact of recovery efforts following the Christchurch earthquake. With mining stocks weak in London, it was not surprising to see the aussie suffer.

This morning’s HSBC manufacturing PMI for China confirmed the earlier estimate that Chinese manufacturing had actually contracted slightly in September. If Chinese growth continues to slow, then the outlook seems gloomy for the aussie, along with all the mining companies that have done so well out of China.