AUD/USD struggles to cheer record high Chinese iron ore prices

Chinese iron ore prices hit record high.
NYMEX iron ore hits five-year high.
AUD/USD ignores the development in the iron ore markets, possibly due to dovish RBA expectations.

Omkar Godbole FXStreet Contributor

AUD/USD is flatlined at 0.6920 this Tuesday morning in Asia despite iron ore prices hitting record highs in China.

Dalian iron ore rose 2.8% to a record high of CNY 774.5 per tonne, having briefly hit limit-up 6% on Monday.

Meanwhile, iron ore futures contract listed on NYMEX is currently trading at 98.14, the highest level in five years. Notably, prices have rallied more than 50% since November.

The AUD, however, is paying little heed to the developments in the iron ore market. It is worth noting that iron ore forms bulk of Australia’s commodity exports. So, a rising iron ore is widely considered as AUD-bullish development.

The Aussie dollar’s lackluster reaction to record highs in China’s iron ore prices could be associated with the dovish RBA expectations. The central bank is widely expected to cut rates by 25 basis points in June and deliver another rate cut in the second half of this year.

Westpac revised its forecast for rate cuts in 2019 from two to three.

Pivot levels

1. R3 0.6963
2. R2 0.6951
3. R1 0.6935
PP 0.6923
1. S1 0.6907
2. S2 0.6895
3. S3 0.6879

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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