“So I guess there’s been a bit of change in which commodities are driving the currency,” Mousina said.Īustralia’s budget in May assumed iron ore would follow a straight line down to $55 a ton in 18 months’ time. She notes that at the same time, LNG and coal prices have been very strong, helping offset the overall impact. “Falling iron ore prices is one of the factors that may keep some downward pressure on the currency, at least in the short-term because of that demand story,” said Diana Mousina, senior economist at AMP Capital Investors Ltd. The Aussie dollar, which historically tracks a combination of commodity prices and yield differentials, has so far withstood the decline. China is yet to provide a value breakdown, but a recent slump in prices - down nearly 40% since August - suggests this will be weaker as well.Īustralia, the world’s largest exporter of iron ore, is caught in a pincer as troubles in China’s property industry and environmental concerns weigh on price and volumes. In volume terms, Chinese imports of iron ore fell 4.2% in October from a month earlier, government data showed Sunday. (Bloomberg) - Australia’s iron ore shipments to China are slowing just as a decline in prices of the key steel-making ingredient is taking hold, potentially weighing on the Aussie dollar and compressing future trade surpluses.
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