The Australian dollar crashed to an eleven-year low as a super-strong US jobs number proved too tempting for currency traders already grappling with fears about the potential damage to the Australian economy from the coronavirus and bushfires.
After sliding as low as US66.62¢ on Friday, a fresh post-global financial crisis low, the Australian dollar recovered to trade at US66.99¢ on Monday.
“The dampening economic impact of bushfires, drought and coronavirus and what that all means for economic activity” are broadly depressing the Australian dollar, said Richard Grace, head of foreign exchange strategy at Commonwealth Bank. “It’s clear that the economy in China has slowed and in some areas has ground to a halt,” said Mr Grace.
Currency markets have been weighing up those elements for a while and it took a stellar US employment report on Friday to lift the greenback and return the Australian dollar to historic territory.
The US dollar has also attracted buying as coronavirus deaths escalate in China, although the rate of infection is slowing. As traders flock to the perceived safety of the US dollar, they are turning away from riskier currencies, such as the Australian dollar.