- Iron ore price rises to a multi-year high.
- Falling Covid-19 cases support the AUD bulls.
- AUD/USD targets fresh yearly high.
The Australian dollar might outperform other prominent currencies on the back of surging commodity prices, falling coronavirus cases in Victoria – its second-most populous state, and the lesser dovishness of its central bank.
Iron Ore Prices Lifting AUD
Australia commands the largest estimated reserves of iron ore; and thanks to the surge in iron ore prices, its currency has found an enhanced appeal among the investors.
The iron ore prices rose by 50 Percent from its recent low set in April, on the back of record monthly Chinese steel production volume and July imports saw 24 Percent increase YoY.
The easing coronavirus restrictions might help the iron ore prices to continue its climb as the global manufacturing sector is emerging out of the recent struggle.
Australia’s most valuable export could help the AUD/USD to touch multi-year highs.
COVID-19 Cases on a Decline, Buoys Risk Sentiments
Victoria recorded its five-week low day-to-day increase in coronavirus cases on August 19, prompting the Chief Health Officer Brett Sutton to say that the state is going in the right direction.
The case peaked on August 2, at 516 cases and the seven-day moving average, tracking the case figures, has steadily declined over the last few weeks. The containment of the virus is attributed to the mandatory mask-wearing and other restrictions.
Also, the growth rate of the virus is now less than one – every single patient is spreading the virus to less than one other individual. The state’s figures are of national importance as it accounts for a quarter of the Australian economy and could buoy the regional equities and the Australian dollar.
