The Australian dollar is trading in a tight range today as investors take a break and get ready for what promises to be a volatile year in the forex markets.
At 7.38am (GMT) the Aussie dollar was trading US72.66c up from US72.47c in yesterday’s trade.
Following a typical pattern that has emerged over the years, the currency market is taking a rest between Christmas and the New Year, as most traders close their positions while others are reluctant to open new ones, preferring to wait on the sidelines until the new year.
The price of Iron ore, Australia’s biggest commodity jumped further overnight rising more than 1% to over US$41 a tonne and up from its all-time low of US$38.30c, which lent some support to the Aussie dollar, with the currency expected to remain stable if the trend continues.
Not all agree with the Aussie dollars resilience, with some analysts predicting that the price of Iron ore would have to rise a lot further (around 10 percent) to justify the recent price of the currency.
Even though the price of Iron ore has rallied in the last few days it is still down by almost 10 percent in the last month while the Australian dollar is up over the same period, which breaks from the traditional correlation between the two.
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