While iron ore prices have soared over the past week, the Australian dollar has hardly budged, in a sign that the traditionally close link between the Aussie and Australia's number one export is waning.

The widely unexpected and much talked-down iron ore rally showed no sign of abating on Monday. The commodity surged 6.5 per cent on Monday, with Metal Bulletin reporting that deliveries to China's Qingdao port went at $US92.23 a tonne.

However, the Australian dollar has been going in the other direction, losing a third of a cent in early trade to US76.44¢. Historically, the dollar and the iron ore price have often moved in tandem.

While the dollar has appreciated in the early part of 2017, it hasn't done so by anywhere near the amount that the iron ore price has, and on occasion it has even moved in the opposite direction. It last did this in 2015, when the dollar persistently hovered around US72.51¢ despite the iron ore price tumbling to $US41.30 a tonne.

While the disconnect between iron ore prices and the Australian dollar could be explained by the fact that analysts don't expect the iron ore price to stay at current elevated levels, Capital Economics' chief Australia and New Zealand economist Paul Dales said that the pair's generally "close" relationship is being disrupted by other factors, namely bullishness around the US dollar.

"There are many different drivers of currencies, and they don't always stay the same," he said. "The US dollar has strengthened over the past two months because markets think there's a greater chance of US interest rates rising." He said the widening of the interest rate differential was weighing down the Australian dollar against the greenback.

Trade link

The Australian dollar trade weighted index, which compares the currency against a basket of others by weighting of the amount of trade Australia does with them, has more closely matched the movement of the iron ore price, he noted.

Further out, the traditionally close link between Australia's fortunes in trade and the value of its currency may be weakening, said JP Morgan chief economist and currency strategist Sally Auld, while pointing to Australia's persistent current account deficit.

"Yes, volumes are strong and prices are strong. But most of that revenue doesn't stay in Australia ... it leaves the country," she said, citing RBA research that found the Australian mining sector is around 80 per cent foreign-owned.

"When we were in the middle of the mining investment boom, revenue flows were reinvested in Australia into building more mines and employing more people. That was positive for the local economy – it grew above trend and the RBA raised interest rates, which was positive for the currency.

"This time revenues are not being redeployed. They're going offshore."

Where global revenues from iron ore sales flowing into Australia tend to raise the value of the Australian dollar, if the opposite occurs then the Australian dollar's status as an iron ore proxy is undermined.

Ms Auld points to another factor of this capital outflow, which is that Australia must to a greater extent look overseas for investment capital. To attract this capital, it is better for the currency to be weak.