australian-dollar-bank-notes- AUD

The Australian dollar was higher against the US dollar by Friday afternoon as short covering at decade lows helped the Aussie recoup earlier losses, helped by disappointing PMI data from the US including a shock return to contraction in services.

AUD/USD was higher by 18 pips (+0.26%) to 0.6633 with a daily price range of 0.6586 to 0.6636 as of 4pm GMT. AUD/USD fell in early Asian trading hours and was lower throughout the day until a pickup in the US afternoon session that saw it turn narrowly positive. Weekly losses stand at -1.21%.

The Australian dollar

The Aussie remains the preferred proxy in FX markets for coronavirus concerns, and the soft Australian employment data earlier this week has added fuel to the fire. The sudden shoot up in the number of coronavirus outside of China has seen sentiment sour again across markets. Economists are trying to predict the timing of the likely rate cut by the Reserve Bank of Australia. Analysts at ANZ  have it pencilled in for Q2.

The flight to safety that has seen the Aussie hit new decade lows this week has been most clear in the 7-year highs struck in gold. The two assets have historically correlated because of Australia’s large market share in gold and other metal exports. But the correlation has completely broken down since the slowdown in China, the largest customer of Australia’s metal exports.

The US dollar

After a strong week, the dollar turned lower following some surprisingly disappointing manufacturing data. The data is particularly striking because the United States had been seen impervious to the uncertainty of the coronavirus. The data from Markit could be the first piece of data to show that is not quite the case. The Markit Services PMI for February fell to 49.4 from 53.4 previously. A level below 50 denotes contraction. Manufacturing narrowly avoided contraction but also saw a decline to 50.8 from 51.9 previously.

To complete the role reversal, data from France and Germany bettered expectations. Part of the appeal of the dollar has been the strong domestic economics when compared to dismal economic numbers in other developed economies. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.