In respect to the Aussie being so strong and the fundamental drivers, Analysts at Rabobank explained that along with coal, iron ore is Australia’s largest export. Key Quotes: "These are the principle components in steel making of which China is the world’s major producer being, responsible for around 50% of the world’s supply in recent years. Having reached multi year lows last year, iron ore delivered to Qingdao has now experienced a 33% rise from its weakest December level. So far this year the benchmark spot iron ore price has rallied over 18% to reach above the $50 a tonne level for the first time since October 2015. The better tone is one of the factors supporting the AUD, but we are sceptical as to ability of iron ore to maintain its upward momentum. The rally in iron ore is in part supported by supply disruptions earlier in the year. In January Australia’s Ports Authority evacuated ships at the Port Hedland and Dampier iron ore ports due to a cyclone threat. In the same month a Brazilian federal court ordered the suspension of activities at Port Tubarão on the back of environmental investigations, though this closure was later overturned by an appeals court. January’s supply disruptions have been followed by reports that Chinese steel producers are restocking after the Lunar New Year holiday. If sustained, the better tone in the iron ore will feed back into higher household and tax revenues in Australia. However, supply issues are likely to prove temporary and Chinese demand is likely to continue to be curtailed by over-capacity in the country’s residential and productive infrastructure. On the assumption that iron ore prices start to sag in the weeks ahead, AUD/USD is set to lose some support." For more information, read our latest forex news.