The iron ore price has edged lower, escaping much of the volatility that shook global financial markets in the wake of British voters’ historic decision to leave the European Union.
Iron ore fell 0.6 per cent to $US51.40 a tonne in the most recent session, according to The Steel Index, from $US51.70 the previous day.
The relatively muted move contrasts with sharp swings in other commodities. The day after the vote, oil prices sank around 5 per cent, while safe haven asset gold soared 4.7 per cent in its largest one-day gain since September 2013.
But the steady trade could be at risk from a rising US dollar, according to analysts at the Bank of Montreal.
The US dollar could increase if investors continue to flock to havens amid the uncertainty caused by the referendum. A strong greenback makes it more expensive for investors using non-US currencies to buy US dollar-denominated commodities, and often weighs on prices.
BMO analysts said base and diversified metals are set to be hurt by a strong US dollar, although underlying supply and demand fundamentals have not changed, Bloomberg reported.
The analysts see more immediate risks to iron ore, steel and diamonds, and fewer risks to copper, base metals and uranium.
The iron ore price has posted a string of muted moves over the last week, with BHP Billiton chief executive Andrew Mackenzie saying the commodity had settled at a more “realistic” level following some sharp swings earlier this year.
Australia’s mining giants could be set to start the week on a downbeat note. In London trade, Rio Tinto fell 0.6 per cent and BHP Billiton lost 1.6 per cent. In New York on Friday, BHP’s ADR tumbled 7.4 per cent amid a broad sell-off fuelled by Brexit nerves.
Source:Theaustralian.com