FX.co ★ Australian Dollar Gains Ground

On Friday, the Australian dollar strengthened to approximately $0.651, recovering from previous losses due to a rise in iron ore prices. This increase was attributed to renewed optimism surrounding economic support from China, enhancing demand for the commodity-linked currency. The iron ore rally was driven by China's June import volumes reaching a peak not seen since 2025, indicating robust restocking demand and expectations of additional policy support for infrastructure and property sectors. Traders gained confidence as Chinese authorities signaled forthcoming stimulus measures, including targeted credit easing and fiscal assistance intended to boost construction activity, which is vital to Australia's iron ore exports. Concurrently, a retreat in the US dollar, influenced by political pressure on the Federal Reserve, provided further support to the Aussie. Nevertheless, the Australian dollar is poised for its first weekly decline in four weeks, impacted by increasing speculation regarding a potential rate cut by the Reserve Bank of Australia in August, following weak labor market data.