Australian Dollar Down As Prices of Iron Ore Continue To Dig Deep

Largely affected by the continued slide in the prices of iron ore in the world market, the Australian dollar, for the first time in five weeks, has dropped below the $US1.0300 mark.

On Friday at 1200 AEST, the currency was trading at $US1.0292, down from Thursday's $US1.0336.

The downward push was triggered by the sharp fall in iron ore prices over recent days, according to ANZ foreign exchange strategist Andrew Salter.

"The movement in iron ore prices has surprised a number of participants and the lower the iron ore price the lower the fundamentals value for the Australian dollar," he said.

If any at all, the saving grace that kept the Australian dollar from sliding further was the market's anticipation over the speech of U.S. Federal Reserve Chairman Ben Bernanke, where the latter is expected to inject a new round of economic stimulus for the U.S.

"Any policy announcement from the Federal Reserve which signalled more quantitative easing would be a positive for the Aussie dollar," Mr Salter said.

The Australian dollar likewise dropped to a five-week low against the Japanese yen of 80.73 yen as well as a nine-week low against the euro of 82.16 euro cents during morning trade.

Prices of the key steelmaking ingredient iron ore had dropped to $90.30 per tonne on Wednesday.

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