The Australian dollar was up against the US dollar on Monday afternoon with a slow economic calendar and mixed updates on the status of the coronavirus outbreak keeping currency traders on edge and sitting on their hands.
AUD/USD was higher by 7 pips (+0.10%) to 0.6685 with a daily price range of 0.666 to 0.671 as of 3pm GMT. The currency pair got an initial lift above 0.67 which was promptly sold, taking it back beneath the key level and towards eleven-year lows.
AUD sees sixth consecutive weekly loss against USD
The exchange rate continues to slide with one catalyst after the other favouring more weakness. The year started with bushfires ravaging the Australian countryside, causing untold economic damage. Rains this week might have put the worst of the fires behind Australia. Now the country faces the potentially worse situation of the coronavirus and curtained trade across the Asia-Pacific. These headwinds were referenced by Australian Prime Minister Scott Morrison and by the Reserve Bank of Australia which lowered its growth forecasts last week.
The shock uptick in Chinese inflation saw the Aussie jump as a proxy for Chinese economic activity. But the gains reversed when the kneejerk reaction turned to fears that if inflation gets too high, it might cause the PBOC to rethink the stimulus it is injecting into the economy in response to the coronavirus outbreak. The central bank kick-started a program of low-to-zero interest rate loans for banks in areas affected by the coronavirus on Monday.
USD slows down after a strong week
The dollar is taking a backseat after a strong week of gains, perhaps with some trepidation about the New Hampshire Primary, thought to be a key moment for whoever might become the Democratic nominee for running in this year’s presidential election.
Not much attention was given to the Fed’s Michelle Bowman who remarked, rather counter to the current narrative that inflation would return to the central bank’s target of 2%. Asa reminder last week, US job growth picked up speed in the first month of 2020 with 225,000 jobs created, a notable increase from the 145,000 in December that put the three-month average back above 200,000.