The Australian dollar sharply higher today continuing its divergence away from Iron ore, which is usually a reliable barometer of where the currency is heading.
At 8.09pm (GMT) the Aussie dollar was trading at US73.44c up from US73.06c in yesterday’s trade.
Iron ore, which is so important to the Australian economy, fell to US$41.60 on Tuesday, which is its lowest level in nearly ten years and should in theory, push the Australian dollar lower.
Now some analysts are speculating that the currency may be distancing itself from Australia’s biggest export.
Annette Beacher, a Singapore-based chief Asia-Pacific Macro Strategist at TD Securities noted If the usual connection had run in course in the last few months between the Aussie dollar and iron ore, the currency should be trading at around US69c and not over US73.50c
Also helping the Aussie today was the European central banks move to cut interest rates and extend their quantitive easing program by another 6 months.
The real booster came when ECB president Mario Draghi noted that the central bank was prepared to inject further capital into the economy at a later date if needed.
The news sent the euro surging over 400 pips against the US dollar with most currencies including the Australian dollar following suite to some extent.
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