Aussie Defiance of Iron Erodes on Fed Bets: Chart of the Day

Plunging iron ore prices and growing bets the Federal Reserve will tighten monetary policy suggest Reserve Bank of Australia Governor Glenn Stevens could gain relief from his strong-currency headache.

The CHART OF THE DAY shows a deepening divergence between an Australian dollar that remains above its 91.5 U.S. cent average since Stevens took office in September 2006, and a slide in prices for the country’s commodity exports as tracked by a Commonwealth Bank of Australia index. Interest-rate differences are also set to work against the Aussie with traders of one-year overnight index swap contracts pricing in a greater chance that Stevens’s U.S. counterpart, Janet Yellen, will raise borrowing costs next year.