Sean Callow, Research Analyst at Westpac, suggests that the dovish Fed tone came just in time for the AUD/USD rally, which had looked set to peter out after a failed attempt at 0.76 earlier in the week. Key Quotes “The record-breaking 18.6% surge in the spot iron ore price on 7 March had been followed by 6 straight daily falls, fully unwinding the stunning rally. All signs are that iron ore export volumes will continue to grow, while China’s Jan-Feb industrial production growth pace of 5.4% y/y was the slowest since the GFC. This is in line with our base case that iron ore spends most of the next year inside $35-45/tonne. The commodity outlook and our Fed view clearly suggest AUD/USD downside risks into mid-year. But short term, the RBA’s steady hand contrasts with ultra-low yields in the G7, supporting AUD. The more positive global risk mood should also encourage speculative demand for AUD. So rather than topping out just short of 0.76, AUD/USD may be able to surf this wave to the 0.77-0.78 region that prevailed last June.” For more information, read our latest forex news.