FxWirePro: Iron ore gives up Trumpflation gains

Iron ore, which has entered the bear market technically last week thanks to its decline by more than 20 percent from the recent peak in February, has continued to sell off. As of today’s trading, Iron ore in China has given up all of its gains made since Donald Trump was elected as the 45th president of the United Sates in November last year.

The futures contract traded on the Dalian Commodity Exchange in China declined by almost 2.3 percent to yuan 522.5 per ton or $75.6 per ton. The last week’s report from Australia’s Department of Industry, that forecasted that the price of iron ore in China might decline to as low as $65 per ton is weighing on the key steel-making ingredient. The report also suggested that the increasing supply from countries like Australia, and Brazil would finally push the price down to as low as $51 per ton.

As President Trump was elected, his election promise of increased infrastructure spending boosted the iron ore price but the recent standoff between the White House and the Republicans in the House has poured cold waters on the expectation of speedy approval of such spendings.

Iron ore is the most important commodity for Australia as it contributes almost 4 percent to the GDP. Hence the Aussie is under pressure and is currently trading at 0.749. It has broken below the 0.75 resistance.