- Dalian iron ore snaps two-day downtrend, spot prices dwindle.
- China vouches for economic stability during Central Economic Work Conference.
- Omicron updates contradict US inflation data to challenge commodity traders.
- AUD/USD struggles to cheer the run-up in main export item amid firmer yields.
Iron ore futures for May 2021 delivery rises past 5.0% to 671 yuan ($105.46) per ton during early Monday morning in Europe. In doing so, the key steelmaking ingredient marks the first daily jump in three while taking clues from China.
During the 2021 Central Economic Work Conference, Chinese officials showed readiness to use monetary and fiscal policy tools to stabilize the world’s second-largest economy in 2022. Given the dragon nation’s status as the world’s largest commodity user, its readiness to spend more ultimately helps the iron prices.
It should be noted, however, that the spot prices aren’t much impressed as Reuters quotes SteelHome consultancy to say, “Spot prices of iron ore, with 62% iron content for delivery to China, dipped $1 to $108 per tonne on Friday.”
The reason could be linked to the market’s cautious sentiment ahead of this week’s key monetary policy meeting by the US Federal Reserve (Fed).
That said, the market sentiment remains divided as Friday’s consumer-centric data favored bulls but the Omicron updates keep fears of supply outage and inflation rush on the table, favoring the needs of the tighter monetary policy.
It’s worth observing that iron ore is Australia’s biggest export item and any move in the prices should ideally affect the AUD/USD. As a result, the Aussie pair reverses the early Asian losses to jump back towards the 0.7190 upside hurdle.
Moving on, commodity traders should pay attention to the virus updates and the China news for intermediate clues before the Fed meeting. In a case where the FOMC members cite Omicron fears and disappoint markets, by not announcing a faster tapering, the commodity basket will have a few more good days.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.