by Chris Becker

The rally continues in the iron ore price complex, on the back of speculation of more stimulus, but in context this is just another blip in the long running downtrend.

Here are the latest prices and charts:

While spot is enjoying a lift, the short and long end futures are still flat as tacks while the real determinant, rebar has already flipped its dead cat bounce.

That hasn’t stopped the calls for a bottom in iron ore, nor the Aussie dollar. From Fairfax:

Analyst Annette Beacher says the Australian dollar should be buying about US76¢ instead of the current US70¢.

TD Securities chief Asia-Pacific macro strategist Annette Beacher says in a note this week that the recent pick-up in the price of Australia’s biggest single export, and in the volumes shipped out of Western Australia, suggests the Chinese economy is not slowing as much as some fear.

The China-linked rout of the Aussie in recent weeks, then, is overdone, she says.

I think the analysis is underdone, especially on the medium to longer term, considering the huge amount of new supply that continues to come on stream in the months and quarters ahead, as steel demand continues to fall in China.

This is but a rally in a bear market – sure the AUD could go up to 76 cents – but its long term future has a 6 or 5 in front of it. We must be cautious tying short term volatility and correlations to longer term trends.

Daily iron ore price update (rally)