A China trap snares the Aussie dollar

Expectations of continued weakness in the iron ore price is seeing savvy investors transition out of what has until now been a very profitable defacto China play.

The signs have been clear for some time: the Aussie dollar should be lower. Commodity prices and iron ore in particular have been in decline for several months already. The Federal Reserve made it clear early in the year that the quantitative easing program would be coming to an end around October and the European economy never really got moving. China was expected to engineer a soft landing with economic growth to come in at around 7.5 per cent, well below the historical levels, which are closer to double digits.

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