The Australian and New Zealand dollars were heading for another week of losses on Friday as fears for the health of the global economy fuelled bets on aggressive rate cuts and drove local bond yields to all-time lows. The only saving grace for the Aussie was that markets reckoned the United States would ease even more drastically than Australia might, so restraining the US currency.
That still left the Aussie huddled at $0.6550, just a whisker above an 11-year trough of $0.6542 hit on Wednesday. It was down 1% for the week so far, having fallen in eight of the last nine weeks.
The Aussie also took a beating on the euro, which jumped to seven-month peaks at A$1.6763 after the head of the European Central Bank played down the prospect of an immediate easing in monetary policy there. The kiwi dollar was off 1.2% for the week at $0.6267, a fresh four-month low.
Both currencies have been dumped as investors worried the spread of the coronavirus would do significant damage to the world economy, a major negative for countries that rely heavily on resource exports and tourism to support growth.
"Fragile industrial commodities and the China travel ban threaten each of Australia's top 5 exports - coal, iron ore, LNG, education, tourism - pointing to a collapse in the trade surplus starting in the January data," wrote analysts at Westpac.
"The RBA's growth optimism lends AUD some support with low risk of easing near term, but we still see two rate cuts this year. It was just a couple of weeks ago that the Reserve Bank of Australia (RBA) was arguing the coronavirus would be a temporary jolt and the economy would still accelerate this year.
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