Over the past 12 months, the Australian dollar has fallen 17.4 per cent against its US counterpart. In that same period, iron ore has more than halved. The Reserve Bank of Australia wants the local currency to push lower to help competitiveness and the difference between the fall against the greenback and a slump on a trade weighted basis, down 10.1 per cent, suggests there is further down to go for the Aussie dollar.

Chinese economic growth is losing momentum, which is hardly surprising given the rate of growth it has experienced over the past decade. Last year, China grew at its lowest rate in more than two decades and marginally missed its 7.5 per cent growth target. With a 7 per cent growth target set for this year, many, such as PIMCO, the world's largest mutual bond fund, are predicting a second consecutive miss.

"The fall in the iron ore price is overstated compared with the Chinese industrial production growth slowdown from 15 per cent in 2011 to closer to 6¾ per cent by early 2015," TD Securities chief Asia macro strategist Annette Beacher said.

China overnight has moved to boost its housing sector by cutting the minimum down payment for a second home to 40 per cent from 60 per cent. Authorities also plan to introduce a policy in which individuals selling an ordinary house would be exempt from business taxes if they had owned it for more than two years, from a previous five years.

Oversupply of high quality iron ore from the three majors, Rio Tinto, BHP Billiton and Brazil's Vale, have flooded the market thanks to a ramp up in production. With demand soft in China, the price of iron ore, and the high cost miners, have been squeezed tightly.

"Iron ore shipments from Port Hedland jumped about a year ago and remain high," Ms Beacher said.

While the price of iron ore has dropped dramatically, the value of exports from Western Australia to China, 80 per cent of which are iron ore, according to TD Securities, has not matched the fall. This is thanks to the sharp increases in production of iron ore from major miners, as mentioned earlier.

"There are clearly two forces applying downward pressure to the iron ore price: while there has been declining Chinese demand, ramped up production and exports of iron ore from Western Australia (where the iron ore is extracted and exported out of Port Hedland) appear to play a larger role more recently," Mr Beacher said.