Home Daily Commentaries AUD outperforms as iron ore price tumbles

AUD outperforms as iron ore price tumbles

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 3 September, 2024

Daily Currency Update

The Australian dollar outperformed through trade on Monday, despite softer domestic GDP indicators and a decline in iron ore prices. Iron ore was a notable underperformer among key industrial commodities, tumbling back below $100 a tonne, marking the end of a two-week upswing as China activity data at the weekend and through trade on Monday feel short of expectations.

With iron ore prices on the back foot, a 10.9% fall in mining profits lead to a broader 5% fall in Q2 Company Operating Earnings, adding to expectations of a contraction in GDP activity through Q2. Despite the lacklustre macro news, the AUD again toyed with a break above US$0.68, marking intraday highs at US$0.6792 having risen steadily on the heels of renewed demand for risk.

With US markets returning from the Labour Day weekend, our attentions remain affixed to the broader risk narrative. Domestic GDP markers offer further insight into tomorrow’s Q2 GDP print, while US ISM manufacturing data and July construction spending dominate the offshore ticket.

We expect ranges will be largely well contained as US non-farm payrolls due Friday cast a shadow across the weekly macro ticket.

Key Movers

With US markets closed in observance of the Labour Day long weekend, liquidity levels were significantly thinned and the USD index largely unchanged as the world's base currency enjoyed mixed fortunes across a basket of majors. The euro, GBP and AUD all advanced against the US dollar, while the NZD and JPY were notable underperformers. German Bonds rose for a 3rd consecutive day, UK gilts edged higher while European equities added support. The euro pushed back above 1.1050 while the GBP toyed with a break above 1.3150.

Our attentions turn now to US ISM manufacturing data, ahead of jobless claims Wednesday and US non-farm payrolls Friday as key drivers of direction.

Expected Ranges

  • AUD/USD: 0.6700 - 0.6830 ▲
  • AUD/EUR: 0.6080 - 0.6180 ▲
  • GBP/AUD: 1.9250 - 1.9500 ▼
  • AUD/NZD: 1.0830 - 1.0930 ▲
  • AUD/CAD: 0.9100 - 0.9200 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.