HYCM Market Insights & Trading Tips

FX Week Ahead 05.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

This week saw the first of the US election televised debates between Joe Biden and President Trump. After the debate, Joe Biden remains ahead in the national polls. Hopes of extra US stimulus boosted risk assets on Wednesday as the prospect of the US stimulus bill passing gained pace. However, shock news that President Trump has tested positive for COVID-19 caused risk assets to sell-off on Friday as hopes of a last-minute deal between President Trump and Nancy Pelosi seemed to be dashed. As long as a stimulus deal remains elusive US equity futures markets should remain pressured.

Key events from the past week

1. CNY: Manufacturing PMI, September 30. Chinese PMI data this week demonstrated that both China’s manufacturing and service industries continue to show evidence of recovery in September. As long as China’s recovery remains in place this should support risk markets in the medium term.
2. GBP: Brexit optimism supports the GBP, September 29. The GBP fell as Brexit hopes were dashed on Thursday to only quickly reverse. Negotiations broke down over the State Aid issue and legal action is due to commence between the EU and the UK. However, the market still remains optimistic a deal will be done.
3. USD: Rising stimulus hopes, September 30. Global stocks markets rallied mid-week on hopes of a new US stimulus package and US 30 year bond yields trad-ed up +1.45%. This market reaction is the assurance that a stimulus package should be supportive for US stocks.

Key events for the coming week

1. AUD: Interest rate decision, October 06. Expectations are for the RBA to keep rates on hold. However, some analysts still see an RBA cut coming in Novem-ber. AUD traders will be carefully watching to see what forward guidance the RBA gives regarding a possible future rate cut?
2. USD: FOMC meeting minutes, October 07. The last Fed rate decision disappointed the market as the Fed was not perceived to be ‘bearish enough’. Will the minutes reveal a more dovish slant by the Fed that was not revealed at the last interest rate decision?
3. USD: Election and stimulus deal, October 05-09. US elections are approaching and we can expect continued volatility in the USD and global stocks. However, if a new US stimulus package is passed, that should support stocks and pressure the USD.

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Will copper find near term sellers?
by Giles Coghlan, Chief Currency Analyst, HYCM

Copper fell in September for the first time in 5 months. You can see the recent strength in Copper in the chart below. Check out the recent post on Copper’s weakness.


The fall in copper prices has been due to rising COVID-19 cases and falling expected global demand for copper. Furthermore, recent mine output data is now showing that production levels are ramping up again. According to Bloomberg Intelligence Analysts reports copper mining output is set to rise 3.5% from 2021 to 2023 after a fall of almost 3% in 2020. This is based on the individual forecasts for 127 mines covering around 80% of the global industry. A key quote from that report is that ‘While growth on a sequential basis tails off as each successive year passes, the market’s ability to digest this new supply will be put to the test quickly’. In other words, will demand meet this new supply level? If COVID-19 cases keep rising then demand should fall and with it, copper prices should remain pressured. The one factor that can still keep copper prices rising is if Chinese demand keeps up.

Stockpiles increasing

However, stockpiles are increasing. Last week LME Copper stockpiles hit two-month highs. Copper inventories tracked by the London Metal Exchange jumped by 33,200 tons to 136,325 tons. This put copper inventories at their highest last week since late July.

Strike risk from Escondida

Another area to watch for short term copper sellers is if there is a strike in the world’s largest copper mine, Escondida, which located in Northern Chile.

The latest news last Friday was that Union members have rejected Escondida’s final offer in wage talks. The BHP owned operation has now requested a five day mediation period. These talks could easily be extended from here. However, a shutdown in the mine could offer copper some near term support.

The big picture for copper remains bullish as green technology is going to be heavily dependent on copper. Once global growth gets back on track you would expect copper further gains. However, for now, it is reasonable to expect sellers on pullbacks for the short term.



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Market Mood AUDJPY 05.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the AUDJPY pair on Youtube.



Strong AUD, Weak JPY

Asian equity markets have traded higher this morning with the ASX 200 outperforming at +2.5% by a surge in energy and financials on the eve of the Australian budget announcement. Other regional bourses reopened from recent holiday closures and participants also digested the positive update regarding President’s Trump health which has continued to improve and the President could leave the hospital as early as today.

The high beta currencies like the AUD, CAD, and the NZD have benefitted on the positive risk tone, and the JPY and USD have been weaker.

Therefore, expect AUDJPY buyers at pullbacks as long as this mood remains.

Trade Risks:

1. If the risk tone turns negative due to President Trump’s health taking a turn for the worse expect this will invalidate this outlook.
2. If the risk tone turns negative on another factor today like rising COVID-19 cases that will also invalidate this outlook.

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Soybean futures eye Friday’s key release
by Giles Coghlan, Chief Currency Analyst, HYCM

Inflation felt in food prices

Food prices are feeling inflationary pressures. This has the potential to hinder consumer spending power as consumers are trying to handle the fall out from the COVID-19 pandemic. A Bloomberg opinion piece on Monday highlighted a few different factors in play:

1. First of all supply levels are tightening. This can be partly attributed to China absorbing cargoes to meet their trade-deal obligations.
2. Secondly, adverse weather like droughts and storms have reduced both corn and sugar prospects.
3. Thirdly, the anticipated arrival for the coming La Nina weather pattern may make this situation worse.

Some key dates ahead

The USDA will release its key monthly estimates on Friday 09 for global supply and demands. If we see a further deterioration of supply stock in Soybeans that should further boost Soybean futures. US September soybean stockpiles fell 42% y/y in September which is the biggest drop in 12 years.

Before that release, we will also have the United Nations release their world food price index. It will show how rising prices have now impacted the cost of food after costs dipped much lower in May to a four year low. This short term dip is in the past now due to the factors listed above. It is possible that by the end of the year the index could be topping January’s high which would make for the highest levels since 2014.


Apart from Soybeans, which hit a two-year high in September, here are some key markets to watch.

1. Sugar has posted its fifth month gain.

1. Corn hit an 11% gain in 3Q.

Friday and the USDA release will be key, so commodity trades keep that in your diary. A break and hold of the trend line below will see more upside in Soybean futures.

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Market Mood XAUUSD 06.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the XAUUSD on Youtube.


The hopes of the passing of a large stimulus bill are continuing to support equity markets this morning. Optimism about a recovering President Trump is also helping the risk complex. The medium-term picture for gold remains very good as long as global interest rates remain low. The recent inflows into exchange-traded funds continue to drive gold higher.

With US rates set to remain low for years, central bankers going all out with QE, a dollar downtrend with room to run and the US election remaining a risk expect XAUUSD buyers at market and at pullbacks as long as this mood remains.

Trade Risks:

1. If the risk tone turns negative and we see very strong USD buying this will invalidate this outlook.
2. If we see interest rates rising that will invalidate this outlook.

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Market Mood ASX200 07.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the ASX200 on Youtube.


Australia’s index the ASX200 should remain supported over the near term after Australia’s Government announced an aggressive stimulus package yesterday. There is a large fiscal deficit plan to support the country and, according to analysts, there will be few ‘losers’ in stocks.

This will help the ASX200 catch up with its Asian peers since a rebound started in March of this year. Australian shares will also be helped by a weaker AUD and as bond yields drift lower towards zero after the Reserve Bank of Australia kept open a rate cut ahead after yesterday’s RBA meeting.

Therefore, expect ASX200 buyers on dips.

Trade Risks:

1. If the risk tone turns negative and we see very strong equity selling this will impact the ASX200 pulling it lower.
2. Any breakdown in relationships between China and Australis will drag the ASX down sharply and invalidate this outlook.

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FOMC minutes key for Gold’s near term direction
by Giles Coghlan, Chief Currency Analyst, HYCM

Bearish minutes will favour gold

Gold bugs will be looking at the FOMC minutes carefully tonight to look for help for the case for gold bulls from the Federal Reserve’s September meeting.

The FOMC minutes could be very useful in communicating some of the Fed’s thinking. For example, the minutes may communicate some of the details of the debate on the conditions that are needed to trigger a rate rise under the central bank’s new approach in aiming for ‘average inflation. The Fed has recently introduced the idea of ‘average inflation’ in order to calm markets that it will not be jumping to raise rates at the very first sign of positive inflation. However, it is the details of how this mechanism will work that the market will be wanting to see. The minutes may provide a clue.

The bottom line is that the harder it is for the Fed to raise rates the better news that will be for gold. The Fed may also reveal whether the potential for other asset purchases was discussed. If they were then that should support gold as well. The other aspect to note is that as long as fresh US stimulus hopes remain alive that will support stocks and weaken the USD further helping gold’s rise. With President Trump tweeting that stimulus may need to wait until after the US elections, this has resulted in some near term gold downside.

A perfect picture for gold tonight would be bearish minutes and a return to positive US stimulus hopes. It is worth noting that many investors are building their gold long positions. The global holdings in gold-backed ETFs are at their record highest level.



Holdings even expanded in August and September as price in spot gold moved lower. The case for gold buying remains: low US rates through to 2023, large amounts of QE, a weak dollar, and a US election risks, and October a strong seasonal month for gold due to Diwali supporting India’s demand. However, will gold buyers step into spot gold now, or will they delay further?



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COVID-19 impact on airline stock
by Giles Coghlan, Chief Currency Analyst, HYCM

COVID-19 has badly impacted the airline industry

There have been very significant passenger number falls that have resulted in some planes even flying empty between airports. As a consequence, revenues have been badly impacted. On top of this aircraft, manufactures have also had to reduce their workforce and production schedules. Airbus for example has reduced its wing production on factories in Broughton, Filton, and Bremen. Boeing has also dropped employees along with General Electric following suit. Rolls Royce is planning to drop around 9,000 jobs primarily from its civil aerospace sector in Derby in the UK.

However, is the worst now behind?

Although airlines share prices are still trading near their four-month lows, analysts are starting to look past the pandemic. There are signals that there is an earnings rebound on the way. It is worth being aware that airlines, unlike some other sectors, are likely to rebound quite strongly after COVID-19. Holiday makers, travel for family, and work-related trips can all be reasonably expected to rebound to very similar pre-COVID19 levels. If you look at the chart below you can see that Earnings Per Share are starting to pick up (blue line) in relation to airlines share prices.



So, this could be the time to pick up a bargain airline stock for the long haul for your portfolio.


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Market Mood AUDNZD 08.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the AUDNZD pair on Youtube.



Strong AUD, Weak NZD

The Reserve Bank of New Zealand said that recent monetary policy actions are working to lower rates in New Zealand and that they are actively working on negative interest rates, as well as for funding for a lending program. There were also comments from the RBNZ’s Chief Economist Young Ha who said we’d rather be aggressive with stimulus and rather do too much too soon than too little too late.

The RBA has opened the door to a rate cut too, but there is still enough of policy divergence between the RBA and the RBNZ here for a short-term AUDNZD upside bias over the next couple of sessions.

Therefore, expect AUDNZD buyers at pullbacks.

Trade Risks: Any negative news between China and Australia will weaken the AUD and invalidate this outlook.

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China is moving again
by Giles Coghlan, Chief Currency Analyst, HYCM

Chinese stocks may be able to expect positive days ahead as local markets re-open again. There has been a positive development over the holiday and that has been that travel activity has been increasing. This offers extra evidence that China’s economy is moving past the pandemic and starting to gather pace.

According to Bloomberg, there were around 425 million people who traveled internally with China through the first 4 days of the break that started on October 01. That makes it to be around 80% of last year’s numbers, so the volume of travel is heading back to normal levels. There may very well still be lower spending as many consumers tighten belts, but increasing local travel is a positive sign for consumer resilience. Recent retail sales data has been good with September’s retail sales data for China showing a +0.5% gain over an expected reading of 0.0%. Further increases in travel underline the gaining consumer strength.

Remember, that China’s economy is not driven by US-China trade, but by domestic consumption. A rough rule of thumb is that about 60% of China’s GDP comes from their consumer. This consumer drive aspect of China’s economy could also be a new direction for China to really double down into. The Communist Party’s Plenum is due later this month and the recent US/China trade war may encourage China to move towards greater consumer-driven growth. The leaders are gathering for a fresh 5-year plan. If this happens the Yuan will get a boost and it will also benefit equities in a number of Asian economies that are heavily reliant on China.
The recent movement in people is saying that the Chinese consumer may be heading back to business as usual. This should support dip buyers on the Hang Seng unless we see a rapid change in the global environment.



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Market Mood BTCUSD 09.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the BTCUSD on Youtube.



A recent piece by Bloomberg intelligence made a case for Bitcoin to reach $100,000 within 5 years. The heart of the thinking was that Bitcoin was now an established instrument and was behaving like digital gold. Low-interest rates and large amounts of Quantitative Easing devalue currencies so this adds to the attraction of Bitcoin. The expectation of a US stimulus bill is also weakening the dollar which supports both gold and Bitcoin.

The number of institutional investors moving into Bitcoin is growing. Just yesterday Square announced that it had bought $50 million worth of Bitcoin. This is adding to the $400+ million already bought by Micro Strategy.

Bitcoin has broken out of a daily trend line, so buyers will take a low-risk entry here and limit risk to the other side of the trend line. With Biden ahead in the polls and the possibility of a Democrat clean sweep will mean more potential upside in commodities, and Bitcoin along with it.

Expect Bitcoin buyers at market.

Trade Risks:

1. If Biden falls behind in the polls then the USD will strengthen and invalidate this outlook.
2. A daily close back below this trend line will invalidate this outlook.
3. A heavy risk-off mood will invalidate this outlook too as equity selling weakens Bitcoin.

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FX Week Ahead 12.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

President Trump announced that he was walking away from a US stimulus package before the US elections this week. The market reaction was fairly muted. This was because whether Joe Biden or President Trump wins expectations are that a stimulus bill will eventually be passed. However, the prospect of the US election is still creating significant volatility in markets and more twists and turns are expected as the Democrats and Republicans seek to outmanoeuvre one another ahead of the US November elections.

Key events from the past week

1. AUD: Interest rate decision, October 06. The RBA kept rates on hold, but they signaled that they would continue to consider how additional monetary easing could support jobs. This opened up the potential for a rate cut ahead for the RBA weakening the AUD. OIS markets now price in a 58% chance of a rate cut.
2. GBP: Brexit headlines whip around the GBP, October 07. The GBP fell and rose on a number of Brexit headlines this week as formal negotiations continued between the EU and the UK. Next week will be crucial for the talks as the UK deadline approaches. See below for more details.
3. ASX200: Australian stocks supported, October 07. Australia’s index the ASX200 should remain supported after Australia’s Government announced an aggressive stimulus package. The large fiscal plan means, according to Bloom-berg analysts, there will be few ‘losers’ in stocks, Register for our Wednesday workshop to find out how you can develop a trading plan for the week ahead.

Key events for the coming week

1. GBP: Key week for the GBP, October 15. The UK is reported to end Brexit talks if no deal is seen by October 15. Last week the EU said that Britain would back down from this deadline, so we may see some strong moves in the GBP next week as the EU and UK potential reach the end of the negotiating road.
2. USD: Retail Sales, October 16. Around 70% of the US economy comes from the US consumer. If there is a healthy retail sales figure that will be positive for risk assets. However, a much weaker reading than expected, showing signs of weakness from the US consumer, will weigh on US stocks next week.
3. USD: Election risks, October 05-09. US elections approaching mean we can expect continued volatility in the USD and global stocks. If Biden’s present lead in the polls fall that should be negative for risk. Register for our Wednesday workshop to find out how you can develop a trading plan for the week ahead.

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Is Bitcoin really headed to $100,000?
by Giles Coghlan, Chief Currency Analyst, HYCM

Bloomberg Intelligence had a recent report on Bitcoin where they projected Bitcoin could rise to $100,000 in the next 5 years. That’s right, $100,000. This was not a ‘crypto nut’ website but a very serious financial publication making a case for significantly higher Bitcoin prices. The Bloomberg intelligence piece had a number of key points. Here are a few key ones:

1. There is limited Bitcoin supply on very favourable macroeconomic environment (low rates, QE etc).
2. The lowest volatility ever vs the Nasdaq 100 index indicates that Bitcoin is ripe to rise from the one-to-one price to index ratio entrenched for three years. The chart below shows the ratio of Bitcoin’s 260 day volatility to that of the Nasdaq reaching a new low. Bitcoin’s price first matched the Nasdaq index value in 2017 at about $6,200. It revised the level in March and has nearly doubled since then with volatility declining for Bitcoin vs it rising for the stock market. Risk is improving for Bitcoin.

1. Bitcoin supply is limited and declining on an annual percentage. The market cap is $190 billion, so too small for large investors. However, if that cap increases then it can become more like a ‘digital gold’, Gold capitalisation is around $9 trillion.
2. As stocks underperform that encourages even more QE and rising debt to GDP ratios. These are tailwinds for gold and bitcoin (via a weaker USD).
3. The rapid rise in the market capitulation of stable crypto coins indicates that central bank digital currencies are just a matter of time. In this ‘digital currency’ market who is the kingpin? Bitcoin. The digital version of gold.
4. There are favourable trends in decentralised finance (DeFi) and exchanges (DEXs).
5. About 90% of the 21 million Bitcoins that will ever be mined have been.
6. Bitcoin is correlating more closely with gold. On a 52 week basis, Bitcoin is the most correlated to the metal in the Bloomberg Intelligence’s database since 2010. When futures were launched in 2017 the Bitcoin to gold relationship was closer to zero vs about 0.44 now.
7. Bitcoin looks to be the leader in a paradigm shift towards digital money and stores of value. It may fail, but the Intelligence piece sees this as unlikely as On-Chain indicators show a solidifying foundation. Read here to understand On-Chain metrics. The Bitcoin has rate continued to increase and has reached new highs.

Looking at the technicals there are a few key points ahead. Check out this break of the daily trend line highlighted last week. The break of the monthly trend line would be a great sign for Bitcoin bulls and necessary for any hopes of Bitcoin reaching $100,000.

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Market Mood EURAUD 12.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mod for the EURAUD pair on Youtube.


Weak EUR, Strong AUD

There has been an increase in cases of COVID-19 in Europe which have resulted in a range of fo stricter measures across the continent. This will impact the economy going forward and slow down a European recovery into year-end as lawmakers face pressure to impose tougher lockdowns.

The number of COVID cases in Australia and China is more contained than in Europe and that should support the AUD into year-end.

Therefore expect EURAUD sellers at market.

Trade Risks:

1. If COVID-19 cases pick up in Australia or China.
2. If COVID-19 cases start falling in Europe.

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Market Mood BTCUSD 13.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the BTCUSD on Youtube.



Bloomberg Intelligence had a recent report on Bitcoin where they projected Bitcoin could rise to $100,000 in the next 5 years. The Bloomberg intelligence piece had a number of key points.

There is limited Bitcoin supply in a very favourable macroeconomic environment (low rates, QE etc). As stocks underperform that encourages even more QE and rising debt to GDP ratios. These are tailwinds for gold and bitcoin (via a weaker USD). There are favourable trends in decentralised finance (DeFi) and exchanges (DEXs. About 90% of the 21 million Bitcoins that will ever be mined have been. Bitcoin looks to be the leader in a paradigm shift towards digital money and stores of value.

Therefore expect BTCUSD buyers on a trend line break on the weekly chart.

Trade Risks:

1. Heavy risk-off markets result in Bitcoin falls.
2. A change in Bitcoin’s appeal as the go-to cryptocurrency.

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Do US Soy farmers look for a Biden victory?
by Giles Coghlan, Chief Currency Analyst, HYCM

Soybean prospects have been moving solidly higher as of late. The explanation behind these moves higher is because of the accompanying reasons. Food costs are feeling inflationary pressure, supply levels have been tightening (in part because of China retaining cargoes to meet their economic trade commitments), an unfavorable climate, and the coming La Nina phenomena is expected to worsen the situation.

Well, another possible factor to help US Soybeans is that US farmers may profit well from the end of Trump’s Presidency. Look at the diagram underneath and you can see that trade war activities strongly pushed down the Soy exchange from the US. A Biden triumph should mean the conclusion to America’s ongoing protectionist policies under President Trump and open up the exchange channels to improve the situation for Soy farmers.

This should mean Soybeans are purchased on dips into the US decisions as long as Biden remains ahead in the polls.


Taking a look at the chart below you can see the key area of support identified which would be a retest of the daily trend line marked on the chart below. This looks like an ideal place for price to find support. Be aware that one of the mains risks to this outlook is if President Trump starts to gain a lead in the polls. This will mean that the market will become risk-averse on a potential return to a trade war with China and US protectionist policies.


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Market Mood GBPUSD 14.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the GBPUSD pair on Youtube.



Weak GBP, Strong USD

EU leaders are poised today to say that no breakthrough has been found in Brexit talks and are poised to vow to step up preparations for a no-deal Brexit according to a draft document. This announcement comes ahead of UK’s PM Johnson’s call with European Commission president von der Leyen and the council President Michel Barnier.

With the USD showing some strength as the trade on a Biden, victory takes a breather expect GBPUSD sellers at market.

Trade Risks: The main risk to this trade is optimistic news headlines on a Brexit deal breakthrough.

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Market Mood AUDNZD 15.10.20
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the AUDNZD pair on Youtube.


Weak NZD, Strong AUD

Reserve Bank of Australia’s Governor Lowe spoke last night and said that it was reasonable to expect that further monetary easing would get more traction than was the case earlier, but the board has not yet made any decision. However, in the Q and A session the Governor said that it is possible to cut rates by 10bps.
This means the next RBA rate meeting is ‘live’ and calls for cutting rates at the November 03 meeting will grow. An interest rate cut weakens the AUD. The RBNZ is still expected to move rates negative, but the falling bond yields between Australia and New Zealand today mean that we can expect AUDNZD sellers today on pullbacks.

Trade Risks: The main risk to this trade is positive news for risk which benefits the AUD more than the NZD.

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Why central banks are adopting digital currencies
by Giles Coghlan, Chief Currency Analyst, HYCM

There has been a move in the perception of digital forms of money. This is being accelerated by the recent COVID-19 inspired lockdowns. When digital currencies originally came out everything appeared to be somewhat, well bizarre. Catching wind of a Bitcoin piece resembled tuning in to a material science class joined with a PC class. Everyone of the explanations seemed, well a tad nerdy and abnormal. Blockchain technology, bitcoin mining, and digital ‘wallets’. It was certainly not an easily accessible technology. However, be that as it may, what was once jeered at is currently being well received. Digital money now has national banks far and wide moving to attempt to keep up. Even recently the ECB is supposed to be genuinely thinking about the utilisation of a digital currency. See here.
The ECB in their own words say:

To ensure that consumers continue to have unfettered access to central bank money in a way that meets their needs in the digital age, the ECB’s Governing Council decided to advance work on the possible issuance of a digital euro – an electronic form of central bank money accessible to all citizens and firms. A digital euro would be introduced alongside cash, it would not replace it. A digital euro would create synergies with private payment solutions and contribute to.

The ECB are not the only central bank to make this move as other central banks begin to test the water.


Facebook spooked central banks

When Facebook proposed a new digital currency that rang alarm bells with central banks. If the 2 billion+ facebook users could suddenly access a digital currency that could easily undermine global financial sovereignty, privacy, and a central bank’s role in implementing monetary policy.

Why this matters?

It means crypto currencies are facing wider acceptance and are moving from ‘fringe’ investment to a potentially new ‘digital currency’ age. Crypto currencies have by no means arrived at complete adoption, but that could be about two change.

In a crypto positive world Bitcoin stands to gain as the ‘digital gold’ in a cryptocurrency world. Interestingly, more and more companies are putting serious cash into Bitcoin. A wider adoption will suit the price of Bitcoin especially as there are only a limited number of coins that can ever be mined. See the recent post here.


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Why China’s coal ban on Australia matters
by Giles Coghlan, Chief Currency Analyst, HYCM

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.

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