The Australian dollar plumbed 11-year lows on Friday, while its New Zealand cousin languished at four-month lows as the impact of the coronavirus epidemic in China, the biggest export market for Australia and New Zealand, made investors seek safer harbours.
The Australian dollar dipped 0.2% to $0.6620 after briefly going as deep as $0.6592, a level not seen since March 2009. For the week, the Aussie was down 1.7% - its biggest drop since end-January. The currency has fallen in seven out of the last 10 weeks.
Losses in the Aussie began on Thursday as news of increased infections in Beijing and abroad sparked worries about the mounting economic impact from the coronavirus. South Korea reported 52 new confirmed cases on Friday. Data on Thursday showing Australia's unemployment rate rose unexpectedly sharply in January added to the pressure on the the Aussie.
Analysts said sentiment had also been spooked by a run of alarmingly weak Japanese economic data which raised the risk of recession. Japan is Australia's second-biggest export market and a downturn would only add to the economic risks posed by the coronavirus in China, its single biggest market.
The New Zealand dollar stumbled 0.4% to $0.6310 for its third straight session of losses. It's down about 2% so far this week. The antipodean currencies have now plunged nearly 6% since the start of this year. "The AUD has fallen to a multi-year low, as growth differentials and concerns over the global growth outlook weigh," ANZ analysts wrote in a note.
"In the current environment, AUD will remain a liquid proxy for global risk, as markets assess the impact of COVID-19," they added, referring to the disease caused by the coronavirus. "We continue to favour defensive positioning as the growth outlook frays."
New Zealand government bonds gained, sending yields about 4-5 basis points lower. Australian government bond futures rose, with the three-year bond contract up 3 ticks at 99.350. The 10-year contract added 5 ticks to 99.050.
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