The Australian dollar is little changed against the US dollar on Friday afternoon at the end of a choppy week for the exchange rate that has been moved expanding and contracting fears over the spread of a SARS-like coronavirus in China and strong Australian jobs data.
AUD/USD was lower by 3 pips (-0.15%) to 0.6833 with a daily price range of 0.684 to 0.688 as of 3pm GMT, with the currency pair looking set to end the week near year-to-date lows.
The dollar finished the week on a sour note after some mixed flash PMI data for the United States. The Market Services PMI for January came in ahead of expectations at 53.2 but manufacturing saw a surprise decline, falling to 51.7. The PMI data from Markit typically generates less currency market volatility than PMIs composed by the Institute for Supply Management (ISM).
Siân Jones an Economist at IHS Markit, the firm that sponsors the surveys said of the data, “the recovery of growth momentum across the US private sector continued to quicken at the start of 2020, with overall output rising at the sharpest pace since last March. Nonetheless, the underlying data highlights a manufacturing sector that is not out of the woods yet, with goods producers seeing only modest gains in output and new orders.”
The World Health Organisation (Who) was still not calling the Wuhan coronavirus a global health emergency by late Friday, offering some hope it can be contained. Chinese authorities have reportedly been quick to act, locking off transport links out of contaminated areas.
The travel restrictions in Wuhan and nearby cities and limited or cancelled Lunar New Year celebrations will likely have a negative impact on first-quarter growth in China. However, after the WHO statement the same might be prevented internationally. Limited transportation out of China might impair some business activity but has reduced concern that neighbouring countries like Australia would see their own outbreak. That has gone some way to reduce the outflows from Asian currencies that were seen at the beginning of the week.