FX

Weaker iron ore prices may weigh on AUD/USD – Goldman Sachs

In its latest report, Goldman Sachs cites expected weakness of iron ore, Australia’s key export, to weigh on AUD/USD prices in the next 12 months.”In addition to potentially lower front-end pricing, weaker iron ore prices may weigh on AUD/USD. Despite their recent surge, our commodity strategists expect that iron prices will fall over the next 12,” said Goldman.

That said, iron ore prices are on their way north to $200 after rising over 14% during the last month. The main catalysts could be China’s faster economic recovery and jumping vaccinations in the West.

Read: Iron-ore: Eyes $200/ ton amid steel boom – Wood Mackenzie

The US bank also mentioned OIS curve and comparatively strong US fundamentals to back the AUD/USD bears going forward. The report adds, “Despite generally rising commodity prices, Australia-specific factors may continue to hold back AUD/USD vs other USD crosses. Most importantly, the OIS curve substantially over-prices our expectations for policy rates, and our rates strategists now see a sufficiently compelling case to own the Aussie front end.”

Against this backdrop, AUD/USD has been trading in a choppy range between 0.7680 and 0.7820 for last three weeks and is recently picking up bids around 0.7750.

Read: AUD/USD: Refreshes intraday high above 0.7750 as China, Japan brings mild risk-on mood on return

Articles You May Like

Watch Fed Chair Jerome Powell speak on the economy and monetary policy
Key inflation measure that the Fed follows rose 0.2% in October, less than expected
Heikin Ashi RSI: This 1 Minute Scalping Trading Strategy Makes 1741% In Profit
UAE’s ADNOC to cut 5% of Dec crude volumes to term-buyers in Asia – sources
Silver Price Analysis: XAG/USD limited while under $21.50, upside bias above $20.85

Leave a Reply

Your email address will not be published. Required fields are marked *