The euro gained on Thursday after survey data showed stable business activity in February, particularly France, while the Australian dollar declined after customs officials at China’s northern port of Dalian banned imports of the country’s coal.

The single currency rose 0.08 percent to $1.1345 against the US dollar, having climbed as much as 0.2 percent to the day’s high of $1.1364 following the release of purchasing managers’ index (PMI) data.

The euro’s reaction highlights the heightened sensitivity of the currency towards any good news from Europe after recent lackluster data, according to FX strategy Director Kamal Sharma.

Monthly survey showed French business activity improved further than anticipated, driven by strong manufacturing growth which helped offset weakness in services that has put firms under pressure after the anti-government yellow jacket protests, while German PMI figures suggested a mixed picture.

France’s preliminary PMI was up 49.9 points from 48.2 in January, exceeding economists’ estimate of 49.0, while index for the manufacturing industry advanced to five-month high of 51.4 from 51.2 in February, compared with forecast for a slide of 51.0.

Several disappointing data since last month has dented support for the euro, leading investors to cut their inflation expectations for the coming months and pushed core bond yields down.

A Citibank economic surprise index showed the euro zone indicator is still stumbling close to six-month lows booked in January.

An ETF tracker of an US investment bank indicates purchasing of euro zone stocks on a FX hedged basis has reached its highest levels since August 2015, pointing to increasing bearishness on the single currency.

Coal Imports Ban Weakens the Aussie


Meanwhile, China’s northern port of Dalian move to ban coal imports from key supplier Australia sends the Aussie lower against its US counterpart on Thursday.

The Australian dollar shed as much as 1 percent to $0.7086 earlier in the session before recovering some losses to trade down by 0.9 percent to $0.7097 against the greenback.

The unclear ban on coal imports from the country, effective since the beginning of the month, comes as major ports elsewhere in China extend clearing times for Australian coal to at least 40 days.

Australia’s relationship with China has been damaged since 2017, when Canberra accused the world’s second largest economy of prying into its domestic affairs.

The two countries were at odds again in February after Australia cancelled the visa of a well-known Chinese businessman. That followed the prohibition of China’s smartphone giant Huawei Technologies Co. Ltd. to provide equipment to its 5G broadband network.

Coal is Australia’s main export earner and the Aussie took a plunge due to concerns over the possibility that the Dalian ban would have a negative impact on its already slowing economy.  

Spokesman for China’s foreign ministry Geng Shuang said the goals are to better safeguard the legal rights and interests of Chinese importers and to protect the environment, adding that the move was completely normal.

Imports through Dalian covers only 1.8 percent of Australia’s overall coal exports, but if the ban posed a more serious harm in the trade ties between Australia and China, then it might have a larger impact, Chief Economist Ivan Colhoun stated.

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