The Australian dollar strengthened to around $0.651 on Friday, recouping some losses in the previous session, as a surge in iron ore prices, driven by renewed optimism over Chinese economic support, lifted demand for the commodity-linked currency.
The rally in iron ore came as China's June import volumes hit a 2025 high, reflecting strong restocking demand and expectations of further policy support for infrastructure and property.
Traders grew more optimistic after Chinese authorities signaled fresh stimulus measures, including targeted credit easing and fiscal aid to boost construction activity, key drivers of Australia's iron ore exports.
At the same time, a pullback in the US dollar amid political pressure on the Federal Reserve further supported the Aussie. Still, the AUD is on track for its first weekly decline in four weeks, weighed down by mounting expectations of a Reserve Bank of Australia rate cut in August following soft labor market data.
Source: Trading Economics
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