News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • 🇯🇵 Core Inflation Rate YoY (AUG) Actual: 0.0% Expected: 0% Previous: -0.2% https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇯🇵 Inflation Rate Ex-Food and Energy YoY (AUG) Actual: -0.5% Previous: -0.6% https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇯🇵 Inflation Rate YoY (AUG) Actual: -0.4% Previous: -0.3% https://www.dailyfx.com/economic-calendar#2021-09-23
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:https://t.co/TK3MNntBdA https://t.co/T6CPbFLv9f
  • RT @FxWestwater: $AUDUSD, $AUDJPY Surge Despite Rising Treasury Yields, Looming Evergrande Risks Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/09/23/AUDUSD-AUDJPY-Surge-Despite-Rising-Treasury-Yields--Looming-Evergrande-Risks.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https://t.c…
  • Heads Up:🇯🇵 Core Inflation Rate YoY (AUG) due at 23:30 GMT (15min) Expected: 0% Previous: -0.2% https://www.dailyfx.com/economic-calendar#2021-09-23
  • Heads Up:🇯🇵 Inflation Rate Ex-Food and Energy YoY (AUG) due at 23:30 GMT (15min) Previous: -0.6% https://www.dailyfx.com/economic-calendar#2021-09-23
  • Heads Up:🇯🇵 Inflation Rate YoY (AUG) due at 23:30 GMT (15min) Previous: -0.3% https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇬🇧 Gfk Consumer Confidence (SEP) Actual: -13 Expected: -8 Previous: -8 https://www.dailyfx.com/economic-calendar#2021-09-23
  • Heads Up:🇬🇧 Gfk Consumer Confidence (SEP) due at 23:01 GMT (15min) Expected: -8 Previous: -8 https://www.dailyfx.com/economic-calendar#2021-09-23
Australian Dollar Forecast: Iron Ore Prices Counterbalancing Dovish RBA

Australian Dollar Forecast: Iron Ore Prices Counterbalancing Dovish RBA

Daniel Moss, Analyst

Australian Dollar Fundamental Forecast: Mixed

  • Surging iron ore prices have counterbalanced the RBA’s decision to extend its bond purchasing program.
  • Better-than-expected employment and retail sales figures may open the door for AUD to continue gaining ground.

Resilient Iron Ore Prices to Underpin AUD

The recent surge in iron ore prices has buoyed the commodity-sensitive Australian Dollar over the last two weeks, despite the Reserve Bank of Australia extending its bond-buying program to keep a lid on the local currency at its February 2 meeting. The RBA “decided to purchase an additional $100 billion of bonds issued by the Australia Government and states and territories when the current bond purchase program is completed in mid-April”, adding that “these additional purchases will be at the current rate of $5 billion a week".

Governor Phillip Lowe praised the central bank’s Quantitative Easing (QE) program, stating that “the bond-purchase program has helped to lower interest rates and has meant that the Australian Dollar is lower than it other would have been”. That being said, AUD has since gained over 2.5% against its US Dollar counterpart, on the back of a 7.5% surge in iron ore prices – Australia’s most valuable export.

AUS Iron Exports to China

Data Source – Bloomberg

Tight supply conditions and robust Chinese demand has underpinned ore prices, as bad weather off the coast of Western Australia disrupted outflows from the nation’s main distribution hub in Port Headland.

However, with Chinese New Year celebrations underway, there is a distinct possibility that a decline in overall demand could weigh on the price of the metallic ore in the near term. Nevertheless, with China heavily dependent on Australian supply, and the global reflation narrative buoying commodity prices, a marked correction lower in iron ore prices seems relatively unlikely.

These factors, in tandem with an ever weakening USD, could limit the Australian Dollar’s potential downside and lead to a more extensive move higher in the medium-to-long term.

Iron Ore Daily Chart

Iron ore daily chart created using Tradingview

RBA Meeting Minutes, Employment Data in Focus

Looking ahead, employment figures and retail sales data for the month of January will be keenly eyed by local investors. A larger-than-expected drop in the unemployment rate could fuel RBA tightening bets, given Governor Lowe’s prediction that the expiration of the JobKeeper subsidy program in March may lead to “a month or two where the unemployment rate blips up”.

Positive retail sales data probably firm overall market sentiment and in turn pave the way for AUD to gain ground against its haven-associated counterparts.

Upcoming Economic Releases

DailyFX Economic Calendar

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES