Is the Australian dollar heading to US80c

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Goldman Sachs has lowered its Australian dollar forecast for the next 12 months to US80¢ as it tips a decline in the terms of trade, less supportive capital flows, concerns about Chinese financial conditions and a further cut in interest rates.

Goldman Sachs' chief economist for Australia Tim Toohey said, "Our bearish Australian dollar forecast is underpinned by expectations that US data weakness is transitory, headwinds to Australian growth are intensifying, the next phase in the decline in the terms of trade has commenced and capital flows are turning less supportive,"

"Geopolitical risks and ongoing concerns over the impact of tightening Chinese financial conditions together risk a more immediate downward adjustment in the Australian dollar."

The revised forecast came as the Australian dollar remain fairly resilient despite sharp falls in the price of iron ore and copper earlier this week, and as fears of slowing Chinese growth re-emerged.

The local currency is still trading around US90¢ this morning, following a almost US1¢ rise on Thursday on the back of better-than-expected jobs data.

The investment bank lowered its three, six and 12-month forecasts to US85¢, US82¢ and US80¢ respectively. The forecasts were US90¢, US88¢ and US85¢ previously.

This forecast has excited overseas property buyers with a flood of them already inquiring in anticipation of lower sales prices due to these speculations on the dollar.