Benchmark
Worst of Both Worlds as Aussie Bucks China-Driven Drop in Iron Ore
Traders are now pricing in a one-in-five chance of a rate cut in September
A digger loads ore onto a dump truck at the Delta 2 mine pit in the Pilbara region, Western Australia.
Photographer: Philip Gostelow/BloombergThis article is for subscribers only.
Australia is caught in a disconnect between the trajectory of its key commodity export and a currency that refuses to follow suit, constricting an economy that policy makers are trying to stimulate.
Iron ore has slumped 30 percent since Chinese Premier Li Keqiang signaled plans March 5 to cut his nation's steel capacity; the world's No. 2 economy is Australia's biggest trading partner and iron ore exports account for more than 3 percent of gross domestic product Down Under. The Aussie dollar, meanwhile, has barely budged in the past month as it trades around the 75 U.S. cent mark.