The correlation weakens considerably if we look at returns. When conducted on the basis of percentage change, the correlation drops to a little more than 0.2. While this is not particularly high, it is is a three-month best.
Iron ore has made a round trip. Last September the 62% iron ore delivered to Qingdao, China cost about $55 a ton. It rose to almost $95 a ton by late February, and with today’s nearly 3% loss, is back at $57, its lowest level since last October.
The Australian dollar had buckled under the dollar’s rally in the last part of the 2016, and finished the year near $0.7200. It rallied a bit more than nickel by the end of February as iron ore peaked. It has been trending lower since the spring equinox, recording a low near $0.7330 on May 9. It broke above the downtrend on May 22, but was unable to sustain the advance through $0.7500. The Aussie is flat to slightly heavier today. Initial support is seen near $0.7440 and resistance pegged near $0.7470. Technical indicators on the daily bar charts seem to favor the downside.