The US dollar Aussie dollar exchange rate pushed to a high of US$0.6732. Across the week, the Australian dollar has gained 0.7% in value against the greenback, in its first week of gains this year.
The statistics surrounding coronavirus have worsened this week. However, the Chinese proxy, the Australian dollar has shrugged off those concerns.
The Aussie dollar is one of the top performing currencies despite analysts expecting coronavirus to hit the Chinese economy hard. A Reuters poll of analysts revealed that the Chinese economy is expected to grow just 4.5% in the first quarter of 2020, compared to 6% growth achieved in the final three months of 2019.
The fact that the Australian dollar is pushing higher suggests that investors are confident of a V-shaped recovery in the Chinese economy. However, this confidence will be dependent on Chinese authorities containing the virus sooner rather than later.
There is no further Australian economic data due today. Investors will now look ahead to the release of the minutes from the February Reserve Bank of Australia monetary policy meeting. The RBA kept rates on hold at the meeting however, speculation is starting to swirl that they might need to start considering a more dovish policy.
The US dollar was on the back foot on Friday following the release of US retail sales. Whilst the data revealed that retail sales increased a solid 0.3% month on month in January, as forecast, delving deeper into the figures there was a cause for caution. The control group of retail sales, which excludes volatile items such as cars, petrol and building material and is therefore more aligned with broader consumer spending was flat.
With a solid labour market, wage growth and strong consumer confidence consumers should be happy to spend, yet these figures indicate there is some nervousness. Investors will now look ahead to US consumer confidence data later today. A small dip in confidence is expected, although it remains at a strong level.