FOREX-Australian dollar hit as China turns back on coal imports

* Euro, sterling fall 0.3% against dollar
* U.S. dollar index up, but close to 3-week low
* Chinese yuan stable after steps to stem its rise
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Olga Cotaga
LONDON, Oct 13 (Reuters) - The Australian dollar fell about
0.5% 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
0.2% to 93.25 =USD from Monday's low after Chinese authorities
appeared to be trying to put a brake on recent rises in the
yuan, one of the basket's components.
Against its main rival, the euro, the dollar rose 0.3% at
1.1785 EUR=EBS . News that a Johnson & Johnson Covid-19 study
was paused due to an unexplained illness in a participants
contributed to a modest dollar rise. But 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 0.5% at 0.7176
against the greenback AUD=D3 as the country's key export
commodity came under threat. It also fell 0.4% against the New
Zealand dollar AUDNZD= and the Japanese yen AUDJPY=D3 .
State-owned utilities and steel mills in China received
verbal notice from China's customs to stop importing Australian
thermal and coking coal with immediate effect. 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.
The Chinese yuan was stable at 6.7410 per dollar CNH=EBS
in the offshore market, after 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 0.3% against the U.S.
dollar GBP=D3 at $1.3030, but was neutral against the euro at
90.46 pence EURGBP=D3 .