The iron ore price slumped on Monday; registering one of its largest daily falls on record, as you can see in the chart below. This decline was triggered by some Chinese growth jitters and weak export data in particular, which showed an 18% slump in exports in February. Although some economists have argued that the February data should be taken with a pinch of salt due to the timing of the New Year holiday, the market seems to be ignoring this, possibly because iron ore stock piles remain high and some analysts are predicting supply to outstrip demand later this year. Thus, there could be further downside in the price of iron ore, especially if we see more weakness in China’s economic data.
This matters to AUDUSD, which tends to move in the same direction as the iron ore price, as you can see in the chart below. Although the relationship is not perfect, it is worth watching out for if you are trading the Aussie this week. From a technical perspective, AUDUSD failed to break above the 0.9165 level – the 200-day sma – during last week’s rally, which suggested some hesitation on the side of the bulls. Now that China growth jitters are weighing on the commodity space, including critical Aussie exports such as iron ore, we could see further weakness in AUD in the short term. Key support lies at 0.8923 – the 50-day sma – then 0.8891- last week’s low.
_20140310165757.png "AUDUSD")
This matters to AUDUSD, which tends to move in the same direction as the iron ore price, as you can see in the chart below. Although the relationship is not perfect, it is worth watching out for if you are trading the Aussie this week. From a technical perspective, AUDUSD failed to break above the 0.9165 level – the 200-day sma – during last week’s rally, which suggested some hesitation on the side of the bulls. Now that China growth jitters are weighing on the commodity space, including critical Aussie exports such as iron ore, we could see further weakness in AUD in the short term. Key support lies at 0.8923 – the 50-day sma – then 0.8891- last week’s low.
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