The Australian dollar’s latest blow came after the fastest US inflation in three decades was recorded in October, fuelling market expectations the Federal Reserve will bring forward rate rises. The data propelled the dollar index, which measures the US currency against a basket of others, to a 16-month peak of 95.262.
Falling commodity prices have added to the foreign exchange pain.
The price of iron ore traded in the futures and spot markets sank below $US90 a tonne this week, from over $US230 in May, as plunging steel demand in China has pushed steel prices to six-month lows as construction demand fades. The currency is sensitive to the price of iron ore, Australia’s single biggest export earner.
Mr Callow said the speed of the pullback in iron ore demand took people by surprise; he forecast the Australian dollar to test US72.50¢ in the short term, and bouncing back as the domestic economy reopens.
Further selling of Australian federal and…