Late last year, the Australian dollar fell one cent in a second when China first started playing sill buggers with Aussie coal. Today, as $20bn in exports are targeted nothing happens. The Australian dollar is serene today:
Bonds are bid:
XJO is soft:
Big Iron too:
And Big Gas:
Big Gold has firmed after the great shellacking:
Big Banks are easing too:
Big Tech is fading away:
So, how long can the AUD hold up against the Chinese trade assault? The media is reporting that virtually all Aussie coal is now blockaded.
In 2018/19, 20% of Australia’s $69bn in coal exports went to China. So we’re talking only $14bn which is nowhere near enough to put a dent in the trade surplus. Even if we add the other $6bn in trade that’s being targeted, and assume it’s also 100% blockaded, it would still leave Australia with a healthy trade surplus which has been running around an average $6bn for several years:
This is why the Australian dollar is ignoring the stoush. The damage is not material in macroeconomic terms, especially as iron ore keeps going up.
Which gives you a hint about when it will matter to the AUD.
