This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The USD lost ground to the majors with the exception of the AUD, which has been in focus on the back of iron ore and a raft of releases from China. AUD/USD has been tracking iron ore and has managed to bounce over the past 24 hours.
With iron ore trading back above $50/t, some confidence has returned to the local currency but the vulnerability is still very much in play. A lot hinged on China’s data today, and of course the jobs numbers out tomorrow.
The pair is currently just hanging on to $0.7600 and further volatility is likely on the way. Needless to say the market broadly expects further AUD weakness.
While it is tempting to sell at current levels, I feel waiting for a bounce is the best value proposition on the AUD. The current momentum in iron ore prices could take the pair a bit higher in the near term and I would then look at selling into that strength.