Wall Street closed mixed on Thursday amid slow progress in US stimulus negotiations on Capitol Hill. The Dow Jones and S&P 500 ended modestly lower, while the Nasdaq Composite and Russell 2000 advanced.
Meanwhile, the United Kingdom’s Brexit trade deal negotiations with the European Union were equally disappointing British Prime Minister Boris Johnson there is a “strong possibility” of a no trade deal Brexit. The British Pound fell sharply given the economic impact of a hard Brexit.
Friday’s Asia-Pacific Outlook
In the Asian session the Australian Dollar rallied to multi-year highs versus the US Dollar. The risk sensitive AUD trades almost 10% higher versus the Greenback year to date after vaccine developments boost risk sentiment. AUD has risen despite growing tensions with China, Australia’s largest trading partner.
Chinese and Australian relations hit new lows however, the Australian Dollar is benefiting from strong iron ore exports to China as it ramps up stimulus-driven infrastructure spending.
Australia is the world’s top iron ore producer. China’s inventory levels continue to drop, suggesting that the nation may increase its imports further or risk facing iron shortages which could severely hamper its economic output.
The Australian Dollar is positively correlated to iron ore prices. Higher prices in the commodity could lift Australia’s economic growth through a growing trade surplus.
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