News: Aussie, kiwi set for biggest weekly loss since Sept as virus haunts

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    The Australian and New Zealand dollars loitered near multi-month lows on Friday, poised for their worst weekly losses since last September, as the export-led currencies bore the brunt of selling over the spreading China virus.

    The Australian dollar AUD=D4 , often traded as a liquid proxy for the Chinese yuan, dived 1.5% this week to be on track for its fifth straight weekly loss. It was last flat at $0.6722, within striking distance of October's low of $0.6670.

    For the month as a whole, the Aussie has lost 4.2% of its value, its worst performance since May 2016.

    The kiwi NZD=D4 fell 1.8% this week and was set for its worst weekly showing since late September. It was last off 0.1% at $0.6567.

    For the month, the kiwi is now down 3.6%, the biggest decline since last August.

    While concerns about the economic fallout from the rapidly spreading coronavirus have kept investors on edge, hopes China - the epicentre of the epidemic - could contain the disease provided some relief on Friday.

    The World Health Organization declared a global emergency on Thursday. Tedros Adhanom Ghebreyesus, WHO director-general, said the greatest worry was the potential for the virus to spread to countries with weaker health systems.

    Yet investors took heart from comments that the drastic steps Beijing was taking would "reverse the tide" and contain the outbreak.

    "He eased some mushrooming fears (of a global pandemic) by suggesting the number of outbreaks is relatively small," said Stephen Innes, Asia-Pacific strategist for AxiCorp.

    "Still, the market is left with the struggle to quantify the economic impact of the coronavirus."

    ANZ economists expect China's gross domestic product (GDP) growth to "temporarily" slow to 5%. For Australia, UBS economists estimate a hit of at least A$1 billion to the country's services export from a two-month halt on China package tours.

    Worries about a marked growth slowdown in Australia from the coronavirus and a prolonged bushfire season at home have led investors to bet the country's central bank will lower interest rates further.

    The cash rate is already at an all-time low of 0.75% following three cuts last year and financial market pricing is pointing to another easing in April. 0#YIB:

    The Reserve Bank of Australia (RBA) will meet on Feb. 4 where it is widely expected to stay pat on rates.

    New Zealand government bonds 0#NZTSY= inched lower, sending yields about 1.5 basis points higher across the curve.

    Australian government bond futures were a shade stronger, with the three-year bond contract YTTc1 up half a tick to 99.385 and 10-year contract YTCc1 rising by 1 tick to 99.030.

 
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