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AUD NZD Exchange Rate Tumbles as Iron Ore Prices Plummet

AUD NZD exchange rates

The Australian Dollar New Zealand Dollar (AUD NZD) exchange rate continued to downtrend on Friday as the pairing was pressured by the sudden collapse in iron ore prices.

Prices are now at their lowest levels since November, with iron ore having now erased all its gains since the start of the year after it nosedived nearly 8% on Friday following a report from Australia’s Department of Industry, Innovation and Science that forecasts that prices will fall to around $65 a tonne by the end of the year, before tumbling even further to $51 a tonne in 2018. Explaining its report a spokesperson said;

 ‘With current price levels unlikely to be sustained beyond the short term, the price is forecast to decline to average $65 a tonne in 2017. The price is then projected to further decline to average $51 a tonne (2017 dollars) over the remainder of the outlook period, weighed down by the combined impact of ongoing growth in low-cost supply and soft demand.’

Analysts have also pointed to the slowdown in China’s steel market as a reason for the sudden decline in Australia’s largest export as declining demand for rebar in China’s construction industry has led to a subsequent fall in demand for the iron ore required to product it.

Meanwhile the New Zealand Dollar advance has been slowed somewhat by a lack of notable domestic data over the last week, with the only major releases this week being a disappointing first quarter Business Confidence report from NZIER and the latest Global Dairy auction which saw prices slide slightly from 1.7% to 1.6%.

Looking ahead to next week the AUD NZD exchange rate may rally on Tuesday as NAB’s Business Confidence survey is expected to show that business sentiment improved last month.

The Australian Dollar may then see another uptick on Wednesday if Consumer Confidence also prints higher in April.

Meanwhile the New Zealand Dollar may suffer on Monday as economists predict that the domestic inflation rate will have slipped in the first quarter of 2017 and as its only data release of the week the ‘Kiwi’ may continue to struggle for the remainder of the session.

Current Interbank Exchange Rates

At the time of writing the AUD NZD exchange rate was trending around 1.08 and the NZD AUD exchange rate was trending around 0.92