The Australian dollar was lower against the US dollar on Friday afternoon as investors rounded off a difficult week for the Aussie with more selling. The World Health Organisation raising its assessment of the coronavirus outbreak to an emergency of international concern hit the currencies of China and its neighbours.
The losses were limited when US inflation stats came in a little lighter than forecast after the decision of the Federal Reserve to keep UD interest rates steady this week.
AUD/USD was lower by 21 pips (-0.31%) to 0.6699 with a daily price range of 0.668 to 0.673 as of 3pm GMT. The Aussie saw sharp early losses but managed to recoup some of them, briefly moving back above 0.67 before settling lower.
The Aussie
If the Australian currency is to see some relief from the sharp selling this year, there is no evidence of it yet. The decision by the WHO is yet another blow to the outlook for the Australian economy. China, Australia’s biggest international customer for its raw materials has placed tariffs on it by the United States and is now dealing with an international health emergency that is crimping travel and trade.
The risks being priced into the AUD are mostly via trade and economic growth but Australia’s close links with China also put it at direct risk from the coronavirus outbreak. On Friday a 42-year old tourist was reported to have caught the virus, the second from the same tour from Wuhan to Australia
A key gauge of US inflation that is used by the US Federal Reserve in deciding interest rates saw a shock decline on Friday. The Personal Consumption Expenditures – Price Index rose 1.6% in December, short of the 1.7% expected but up from 1.4% the month prior. The data is particularly significant after Fed Chair Jerome Powell this week said in his statement that the central bank is not satisfied with inflation below its target of 2%. The Fed said it is monitoring the risk of a “downward spiral” in inflation in the United States seen in other countries.
