The Australian dollar has been the worst-performing G10 currency in today’s Asian session as iron ore prices dropped by more than 10%. Economists at ING expect the AUD to stay under pressure as iron ore prices are set to move downward.

China's stance against iron ore speculation clouds the outlook

“Today’s signal from Chinese authorities is clear: a recovery in activity will not be accompanied by another big rally in commodity prices. This limits the upside potential from iron ore despite an expected rise in steel production, with direct and indirect intervention against price speculation from Beijing likely to be the new normal.”

“Our commodities team continues to favour a gradual contraction in iron ore prices and warns of the material possibility of seeing sub-100$/t levels by year-end. This should limit any sustained rally in the aussie dollar for most of 2022.”

“For today, AUD/USD may hold above 0.7100 unless the Ukrainian situation deteriorates.”