Australian dollar near 1-week lows, New Zealand dollar ticks up

SYDNEY (Reuters) – The Australian dollar hobbled near one-week lows on Wednesday on worries top trading partner China was imposing new restrictions on coal imports while the New Zealand dollar was a shade higher.

Australian dollars are seen in an illustration photo February 8, 2018. REUTERS/Daniel Munoz

The Aussie AUD=D4 was last at $0.7162 after two days of losses took it to as low as $0.7151 on Tuesday, a level not seen since early October.

The losses accelerated on news reports on Tuesday that state-owned utilities and steel mills in China have received verbal notice from customs to stop importing Australian thermal and coking coal with immediate effect. [nL4N2H4171]

Coal is Australia’s No.2 export earner after iron ore with China the biggest buyer.

ANZ analysts estimate about 36% of Australian coking coal exports have ended up in China so far in 2020, up from 28% in 2019.

“This all seems to suggest it’s another concerted effort by authorities to support the domestic market,” ANZ’s Daniel Hynes and Soni Kumari wrote in a note, adding they don’t see any medium-term implications from the move.

“Nevertheless, this will weigh on prices of premium hard coking coal,” they said.

“Cargoes are taking a long time to be sold amid the confusion, with buyers treading carefully. Any distressed cargoes of coking coal will also struggle to find a home quickly outside China, with the steel market extremely weak.”

Earlier, a survey of Australian consumer sentiment for October showed the index climbed to the highest since July 2018 in a sign of confidence in the country’s fiscal and monetary authorities for their handling of the coronavirus pandemic. [nS9N2FN01A]

In New Zealand, the dollar NZD=D4 was 0.2% higher at $0.6662 after hitting a two-week trough of $0.6547 last week on growing bets interest rates in the country would fall into negative territory early next week.

On Wednesday, Reserve Bank of New Zealand (RBNZ) Assistant Governor Christian Hawkesby cemented views negative rates were being actively considered.

He said the economy was expected to require continued policy support over time and that talking about negative rates was not a “game of bluff”. [nS9N2FN01B]

New Zealand government bonds <0#NZTSY=> rose, with yields down about 1-3 basis along the long-end of the curve.

Australian government bond futures were little changed, with the three-year bond contract YTTc1 flat at 99.82. The 10-year contract YTCc1 was up half a tick at 99.155.

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