The Australian dollar brief rise above the US75c mark was stopped in it’s tracks after a fall in the iron ore price yesterday erased almost half of this week’s stellar gains.
After jumping by 20 percent on Monday, Australia’s biggest commodity fell 8% in yesterday’s trade and some are beginning to predict the price is unsustainable.
Iron ore has now risen over US$20 a tonne from a low of US40 a tonne since the start of the year.
According to a Bloomberg report, junior miner BC Iron expects the price to settle in a range around US$45 to $US$55 in the nearest future.
“We have seen this surprising blip on Monday into the $US60s, we don’t think it will stay there and it will come back,” noted BC managing director Morgan Ball.
Analysts from Goldman Sachs are even more bearish on the outlook and have predicted a price of between US$30 and US$40 as the year unfolds.
The market will now pay attention to the latest interest rate decision from the European Central Bank followed by a monetary press conference where further stimulus measures are expected to be announced.
This could see investors bail out of the Euro and into the US dollar while also exiting riskier currencies like the Australian and New Zealand dollar’s.