FOREX-Australian dollar hit as China rejects coal imports

* Euro, sterling fall 0.2% against dollar
* U.S. dollar index up 0.1%, but close to 3-week low
* Chinese yuan rises slightly vs dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Adds new comment and ZEW survey, updates prices)
By Olga Cotaga
LONDON, Oct 13 (Reuters) - The Australian dollar fell on
Tuesday after reports that China has halted coal imports from
the country as their relations deteriorate, while the U.S.
dollar recovered from a three-week low plumbed the day before.
The dollar index against a basket of currencies edged up
0.1% to 93.18 =USD after Chinese authorities appeared to be
trying to put a brake on recent rises in the yuan, one of the
basket's components. It remained close to the three-week low of
93 it fell to on Monday.
Against the euro, the dollar rose 0.2% at 1.1788 EUR=EBS .
News that a Johnson & Johnson Covid-19 study was paused due to
an unexplained illness in a participant contributed to a modest
dollar rise. The fact that investor sentiment in Germany fell by more
than expected in October failed to leave a mark on the euro.
Investors will be looking for the U.S. consumer price index
at 1230 GMT. Economists polled by Reuters expect the CPI rose
0.2% month-on-month in September, compared with 0.4% the month
before.
The U.S. currency's safe-haven appeal was limited by growing
expectations former U.S. Vice President Joe Biden's win in the
Nov. 3 presidential election would bring large stimulus for the
pandemic-hit economy, bolstering the stock market and investor
risk appetite.
The Australian dollar was last down by 0.3% at 0.7194
against the U.S. dollar AUD=D3 as coal, the country's key
export commodity, came under threat. It also fell 0.3% against
the New Zealand dollar AUDNZD= .
State-owned utilities and steel mills in China received
notice from China's customs to stop importing Australian thermal
and coking coal. Analysts, however, said both the
country and its currency should weather the storm.
Kerry Craig, global market strategist at J. P. Morgan Asset
Management, noted that it is easier to find another supplier for
thermal coal than it is for coking coal, making it difficult to
substitute Australian coking coal.
"There is still a clear symbiotic relationship between the
two nations in as much as Australia is still reliant on exports
to China and China is reliant on the higher quality coal and
iron ore from Australia while it rebuilds its economy," Craig
said.
Kit Juckes, macro strategist at Societe Generale, said the
Aussie dollar should also remain supported by Australia's strong
fiscal stimulus.
Deutsche Bank analysts found that Israel, Singapore and
Australia would be the biggest beneficiaries from the
announcement of a vaccine.
The Chinese yuan rose 0.1% at 6.7328 per dollar CNH=EBS in
the offshore market. The central bank set a weaker-than-forecast
midpoint, offseting any boost from strong Chinese trade data.
China's central bank also announced over the weekend the
removal of reserve requirements for some foreign exchange
forwards, cementing speculation Beijing wants to curb the yuan's
strength.
Elsewhere, the British pound fell 0.2% against the U.S.
dollar GBP=D3 at $1.3037, but was neutral against the euro at
90.45 pence EURGBP=D3 .