AUD/USD: Below 0.65 for First Time since 2009

The Australian dollar was down against the US dollar on Friday amid a flight to safety in the greenback and continued selling of Asia-Pacific and commodity-backed currencies like the Aussie and the Kiwi dollars after New Zealand reported its first case of the coronavirus.

AUD/USD was lower by 75 pips (-1.14%) to 0.6493 with a daily price range of 0.6492 to 0.6586 as of 3.30pm GMT. Having made up some ground on Thursday, the currency pair turned lower again on Friday to hit new 11-year lows.

The AUD down as first coronavirus case is found in New Zealand

The Australian dollar as well as commodities like oil and even gold were sold off on Friday as global stock markets tumbled. Symbolising the extreme risk-off sentiment to have hit global markets this week, the  Dow Jones Industrial Average, and index of America’s top 30 shares fell more than 1000 points on three days.

The Kiwi dollar slumped over -1% after news broke that New Zealand has its first case of the coronavirus. A 60-year old man who had travelled to Iran was found to have been infected by the disease according to New Zealand’s Ministry of Health. The close economic and historic ties between Australia and New Zealand tends to see their currencies move in lockstep. In this case, both economies face the same threat from the COVID-19 outbreak through trade with China and the slowdown in domestic activity.

A rally in the dollar amid global market turmoil caused a shock 2% daily decline the price of gold back below $1600 per oz after coming close to $1700. Gold has been inversely correlated with US Treasury yields which hit record lows this week but rebounded on Friday as Federal Reserve officials refused to be tied down to cutting interest rates in response to the coronavirus. Fears for the economy have seen markets position for central banks to respond but so far the so-called Fed-speak – that’s the language used by US central bankers has not matched the move in markets. Economic data is taking a backseat to fears over the possible economic costs of the coronavirus.

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