AUD NZD Exchange Rate Plummets as Iron Ore Prices Retreat
The Australian Dollar New Zealand Dollar (AUD NZD) exchange rate continued to slide on Thursday as markets reacted to a further downturn in iron ore prices.
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Metal Bulletin reports that the spot price for benchmark 62% fines plummeted 3% to $84.99 a tonne by the start of trading on Thursday, with the commodity now surrendering over 8% over the last four sessions.
The fall has been attributed to a further depreciation in Chinese steel futures as explained by Metal Bulletin;
‘Rebar futures fell close to its daily lower limit during the day, which led to pessimism growing in the spot market.’
It is still unclear what has prompted the drop in Chinese steel markets, as the start of spring usually sees rebar demand rise as activity in the construction sector begins to pick up again in the warmer weather.
However some observers have begun to suggest that speculative force are once again at play. In speaking to Reuters an anonymous iron ore trader said;
‘A lot of speculative players in the paper market create volatility in the price and this volatility has affected the physical market. Fundamentals have not changed so much. Seasonal demand is still happening because the temperature in most areas in China is warm enough for construction projects to proceed.’
Meanwhile the New Zealand Dollar found its advance slowed yesterday by the Reserve Bank of New Zealand’s (RBNZ) latest monetary policy meeting.
While markets had predicted that policymakers would vote to leave interest rates at a record low of 1.75%, they were disappointed by RBNZ Governor, Graeme Wheeler’s outlook that the Bank was unlikely to hike rates in 2017.
Wheeler pointed to weaker dairy prices and rising global uncertainty as reasons that monetary would be kept ‘accommodative for a considerable period.’
Looking ahead the AUD NZD exchange rate may cede further ground during Friday’s session as New Zealand releases its latest trade Balance figures, with economists forecasting that country will print its first trade surplus since June.
Meanwhile a lull in Australian data for the remainder of the week could prompt the ‘Aussie’ to drift even further downward, especially if commodity prices continue to weaken in overnight trading.
Current Exchange Rates
At the time of writing the AUD NZD exchange rate was trending around 1.08 and the NZD AUD exchange rate was trending around 0.92