The Australian and New Zealand dollars were back on the ascent on Thursday after Beijing relaxed restrictions on Australian coal exports and the Japanese yen suffered its largest drop on the Aussie since mid-2016.
A series of wild swings left the Aussie up at $0.6830 AUD=D3 , having jumped 1.7% overnight and away from a low of $0.6689. That took it to within a whisker of the 200-day moving average at $0.6850 and a break would be technically bullish.
The kiwi dollar lagged a little at $0.6292 NZD=D3 , after bouncing 0.7% overnight. Both benefited from a sudden reversal in the yen, which saw the Aussie surge 2.9% overnight to 90.48 yen AUDJPY= .
The gains were partly triggered by news China's state planner has allowed three utilities and its top steelmaker to resume coal imports from Australia, the first such move since Beijing imposed an unofficial ban in 2020.
High prices saw the value of coal exports boom last year to almost match that of iron ore, so the resumption of trade to China should be a major positive for Australia's current account surplus.
It would also help offset concerns the current spread of coronavirus cases in China would hurt demand in the short term, allowing investors to focus on the prospect of a swifter recovery once China reopens fully.
"We see infections peaking around the Lunar New Year holiday in late January, which should set up China for a sizable recovery from next quarter," analysts at JPMorgan said.
"We now forecast growth to jump to a 10.4% annual rate in 2Q23 - previously 6.1% - and remain at a strong 6.8%ar during 2H23."
The Aussie also got a leg up on the euro, which fell 1.1% to A$1.5517 EURAUD= after French inflation data surprised on the downside. That followed a softer reading on German consumer prices and saw analysts trim forecasts for EU-wide inflation.
Another sharp fall in oil prices added to the inflation optimism, as did the ongoing slump in European gas prices to below where they were when Russia invaded Ukraine.
All of which stoked a sizeable rally in global bonds. Yields on Australian 10-year paper AU10YT=RR dived 16 basis points overnight to 3.84%, while futures have gained 22 ticks so far this week to 96.1450 YTCc1 .
