Analysts at Goldman Sachs are out with their take on the Chinese Dalian port coal imports ban and the Australian dollar, given the positive fundamentals.
Key Quotes:
On China’s Dalian ports banning of Australian coal imports:
“Terms-of-trade impact should be short-lived.
Less than 10% of Australia’s coal exports to China go through Dalian ports equivalent to roughly 0.06% of GDP.
Import ban focuses on high-grade coking coal-which is more difficult to substitute than low-grade thermal coal-and Australia is the cheapest source likely limiting the ban’s scope as a long-term policy.”
On fundamentals and currency:
Signs of progress on US-China trade negotiations.
Stronger-than-expected labor market report.
“We ultimately expect AUD to regain its correlation with risk but the weaker domestic cyclical picture excluding the latest employment data may also remain a headwind in the near-term.”
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