GBP/AUD is confidently advancing on Friday, extending the rally that took off yesterday.
The pair is currently trading at 1.9565, up 0.52% as of 7:30 AM UTC. Yesterday, the price gained 0.66%.
The Pace of New Cases in China and South Korea Accelerates
Aussie is tumbling amid the coronavirus outbreak in China – Australia’s largest trade partner and source of tourists. The currency is about to post the biggest weekly drop since January.
Earlier today, China reported an increase in new cases of coronavirus, now called COVID-19, though the pace is still at its lowest since January.
Mainland China saw 889 new cases, up from 394 cases reported on Thursday. Hubei province alone had 411 new cases, up from 349 yesterday. The death toll in China rose by 118 to a total of 2,236, mostly in Hubei.
The outbreak will be discussed at a meeting of finance leaders from the G20 countries scheduled for this weekend in Saudi Arabia. China won’t send any of its representatives.
Elsewhere, South Korea reported its first coronavirus death, while new cases more than tripled on Friday.
ANZ analysts said in a note to clients:
“The AUD has fallen to a multi-year low, as growth differentials and concerns over the global growth outlook weigh. In the current environment, AUD will remain a liquid proxy for global risk, as markets assess the impact of COVID-19.”
Australia’s PMI Below 50
A few hours ago, Markit published Australia’s composite purchasing managers index (PMI), which includes both the manufacturing and services sectors. The index declined again in February, dragged down by weak client demand, the coronavirus epidemic, and bushfires.
The services PMI declined to 48.4 from 50.6 in January, while the manufacturing PMI slightly increased to 49.8 from 49.6 last month. The 50 mark separates growth from contraction.
Gareth Aird, a senior economist at the Commonwealth Bank of Australia (CBA), commented:
“The February flash PMIs imply a contraction in private demand. Whilst this is clearly a disappointing result, it is not altogether surprising given the two exogenous shocks that have hit the Australian economy – the bushfires and the coronavirus (Covid-19).”
Besides this, the Australian Bureau of Statistics said yesterday that unemployment rose to 5.3%, while analysts expected an increase to 5.2%.