A rebound in the value of the US dollar and another fall in the price of iron ore saw the Aussie currency hit new four year lows overnight Wednesday.
The currency shed 2 US cents in 24 hours to touch a low of 85.65 US cents. It was trading around 85.80 cents at 7 am this morning.
At the same time, oil prices steadied above $US76 a barrel for US type light crude, but gold slumped again, dropping to around $US1,146 an ounce, while silver fell under $US16 an ounce and copper dropped to $US3 a pound in New York trading.
The Aussie dollar hit levels it last saw in July 2010 (in the wake of the GFC). Also helping drive the currency lower was the continuing ripples from Japan’s dramatic expansion of its version of quantitative easing which has sent the yen down to 7 year lows against the US dollar, and boosted the Tokyo stockmarket.
Undermining iron ore prices was the decision by the Chinese government to tell steel mills around Beijing to stop steel making until after next week’s APEC summit.
The move (it’s also aimed at other polluting industries, such as power) is designed to allow smog to clear from the skies over Beijing (its a move similar to the one we saw for the 2008 Beijing Olympics).
Beijing hosts the annual APEC meeting from November 7-12, prompting the move to order factory shutdowns to try to ensure clean air during the event.
The provinces of Hebei, China’s major steel-producing region that surrounds the capital, and Shandong, the third-largest, will bear the brunt of the losses.
That news saw iron ore prices (with 62% iron content ) fall 2% to $US76.46 a dry tonne, the lowest level since September 2009. Iron ore prices are now down 43% so far this year.
Australian iron ore exports continue at near record levels with the amount of ore shipped from Port headland in WA climbing to a record 37.5 million tonnes last month.
Exports to China jumped to 31.7 million tonnes, just under the all time high of 32 million tonnes shipped in August, and 26% up on a year ago.
Traders in share price futures ignored that news and the local market is tipped to open up around 15 points this morning.
The rebound in the value of the greenback hit other commodities to varying extent – Comex gold lost nearly 2% or $US22 an ounce to end at $US1,146 an ounce, silver fell 51 cents or 3.2% to close at $US15.44 an ounce, while copper lost a cent to end at $US3 a pound on Comex.
The price of Brent crude, the global oil marker, fell 0.9% to $US82.11 a barrel overnight Wednesday, its lowest level since November 2010.
US West Texas Intermediate, the US benchmark, fell to a day’s low of $US76.60, but remained above its session low of $US75.84 reached on Tuesday. It then bounced 2.1% to trade around $US76.85 a barrel in early Asian trading.
