Strong iron ore prices (key Australian export) bode well for AUD

Author: Eamonn Sheridan | Category: News

Comments from ANZ on the continued strength in the price of Australia's major export. The bank sees this persisting for the next 6-9 months:

  • Iron ore futures extended recent gains on the back of a positive outlook for steel demand in China. 
  • Part of the support has come from the real estate sector, where activity is even stronger than before the crisis began. 
  • Housing transactions have picked up strongly on the back of pent-up demand, particularly in China. This sector consumes about 40% of total steel consumption and it also has important implications for downstream demand. 

On risk though:
  • However, continued weakness in the labour market could see this recovery falter, particularly if government support is removed.
A positive input for the AUD is the high price of its major export to China. 

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