Prices up 8.5% since the start of the month
Iron ore prices are a surprise source of strength for the Australian dollar this month with the commodity up 8.5% and nearly 20% since mid-November.
Iron ore analysts are scratching their heads for the reasons for the recent jump but it's a great sign for struggling Australian exporters.
Prices spiked earlier in the year on Brazilian outages but this move appears to be related to sudden Chinese demand. In late November the Beijing ordered local governments to speed up debt issuance for infrastructure projects as part of a stimulus push. That could be sparking some stockpiling at Chinese steel mills.
"There is a little bit of confusion as to why it's gone nuts," Tomas Guttierez, an analyst at Kallanish Commodities, told Bloomberg after Monday's 5.2% jump. "I do find it hard to see what's really changed."
The bad news for AUD is that most iron ore analysts see a surplus in production next year. In AUD/USD, this major trendline remains the focus.
