Donald Trump's first press conference sends Aussie dollar soaring
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Last night Donald Trump put a rocket under the Australian dollar as he delivered his first press conference as President-elect of the United States.
The dollar rose a full US cent against the greenback as traders pared back their hopes the incoming President would make good on his plans to turbo-charge the nation's economic growth.
Westpac Bank's senior currency strategist Sean Callow said the market has bet big that Mr Trump will fire up the US economy, so there is a lot riding on whatever he says, whenever he says it.
"Politics is the new economics," he said.
"It's certainly going to be something we can't ignore in the markets, we have to focus on politics."
Those expecting Mr Trump to expand on his promises to stimulate the economy by boosting government spending and cutting corporate taxes were left disappointed last night.
Instead, his press conference was dominated by discussion of unverified intelligence memos regarding Mr Trump's alleged ties to Russia.
It sent the US dollar tumbling and, as a consequence, the Australian dollar soared, pushing well above 74 US cents.
Iron ore rally continues
Another big mover on the markets overnight was the price of iron ore.
Traders have been caught off guard by the Chinese Government's enthusiasm to super-charge the country's property market.
It has led to a shortage of steel and its main ingredient, iron ore.
Edward Meir, a senior commodities analyst with INTL FC Stone based in New York, said this big rally will last for some months to come.
"Our take is that the Chinese property rally will last until the latter half of Q2 this year, so another four to six months."
After that he says, the market should prepare for a rather rude price shock.
"Already we're starting to see real estate start to slow down in China.
"Some prices are coming down, others are, you know the rate of growth is levelling off, sales are coming down, but I think there's going to be a couple of months in terms of a lag time before it filters through to the steel and iron ore markets.
"So we think that both steel and iron ore will remain fairly steady through the first half of the year and we expect, I would say about a 20-30 per cent retracement over the second half, if our scenario of slowing Chinese real estate takes hold."
But as Westpac's Sean Callow explains, in the meantime, the longer the price of iron ore holds at these levels, or pushes higher, the more money will flow into government coffers and ultimately the hip pockets of Australians.
"Iron ore as you mentioned, very much well supported," he said.
"The prices have held up much higher for much longer than we expected and certainly they're running well above the government's budget figures, so that's good news."
Topics: business-economics-and-finance, currency, markets, us-elections, australia, united-states
