I am an unpublished YA writer from Australia and I want to eventually break into the American publishing market (by which I mean an American Agent/Publisher) due to the fact that the Australian industry is currently in dire straits and the YA industry isn't as big here anyway.No, there's no inherent problem in setting your story in Australia, any more than there's a problem setting your story in Germany (The Book Thief), Japan (The Great Fire) or Somewhere Else (Dreamhunter, The Arrival). If the only thing that your Australian readers identify with is the Australianism of your work, then that's a problem, but if you've got involving characters and plot, no worries.
So, my question is: do you think that Editors (or even Agents) would be turned off by a ms that was set in Australia? I'm write mainly urban fantasy/paranormal but I can't just set it in an U.S. city since I've never been over there... What do you think? Is there no hope? Should I try and get an Aus agent and forgot all about my American dreams?
Keep Melina Marchetta, Jaclyn Moriarty, Sonya Hartnett, and the many other successful Australian imports to the U.S. in mind, and write.