Why China’s coal ban on Australia matters

Giles Coghlan LLB, Lth, MA Financial Source

The reports last week that China may have banned Coal imports from Australia is one headline to keep a note of. The reason for this is because around 30% of Australia’s GDP comes from its trade with China.

Australia’s biggest trading partner is China. Take a look at the list of Australia’s trading partners below and you can see that China sits very firmly at the top of the pile.

In terms of Coal exports, this makes up around 20% of all Australia’s exports. It’s a very big deal. In terms of GDP coal imports made up around 3.2% of Australia’s GDP.

Of these coal imports just under one-fifth of them go to China. So, this means that around 0.64% of Australia’s GDP is in the balance with this news.

If the reports are confirmed that China has instructed some domestic power plants and still mills to suspend buying Australian coal that is concerning. Australia and China have fallen out over the recent China vs West narrative which has been the offshoot of the US vs China trade war. The tensions however would dissipate with a Biden presidency, which the polls are projecting at the moment. So, expect any confirmation of these reports to weigh on the AUD. The reports overnight that Chinese Mills are being told to stop buying Australian cotton as potentially large tariffs loom is a concerning sign that relationships are not good between Australia and China.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

EUR/USD extends its optimism past 1.1900

EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Litecoin eyes $50 as heavy losses weigh on investors

Following a strong downtrend across the crypto market over the past week, Litecoin holders are under immense pressure. The Bitcoin fork has trimmed about $1.81 billion from its market capitalization since the beginning of the year, sending it below the top 20 cryptos by market cap.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.