FXstreet.com (Barcelona) - In more recent months the AUD exchange rate has diverged somewhat with Australia’s key bulk commodity prices. Iron ore has fallen toward USD $90.00 per ton with declines in coking and thermal coal prices also very noticeable.
According to the Analyst Team at ANZ, “Such divergences are historically common and it is quite regular to see the exchange rate swing around the level implied by these commodity prices alone. Changes in interest rate differentials and changes in the base currency, i.e. the US dollar, is typically the driving factor.”
“Ultimately, neither the interest rate differential, which is around average levels, or the US dollar, which has slowly strengthened over the past 12 months, can account for the present divergence.” the Team notes.
According to the Analyst Team at ANZ, “Such divergences are historically common and it is quite regular to see the exchange rate swing around the level implied by these commodity prices alone. Changes in interest rate differentials and changes in the base currency, i.e. the US dollar, is typically the driving factor.”
“Ultimately, neither the interest rate differential, which is around average levels, or the US dollar, which has slowly strengthened over the past 12 months, can account for the present divergence.” the Team notes.
