Australian Dollar Drops Amid Risk Aversion On Growing Coronavirus Fears

The Australian dollar lost ground against its key counterparts during the Asian session on Thursday, as Asian stock markets slipped into negative territory despite the European Central Bank's announcement of stimulus measures to combat the coronavirus.

The European Central Bank or ECB said it will buy 750 billion euro in bonds through 2020 to help support the European economy amid the COVID-19 pandemic.

Reserve Bank of Australia decided to lower its key interest rates further to a record low and also to purchase government bonds, as the spread of covid-19 disrupts economic activity.

At the meeting on Thursday, the Reserve Bank Board headed by Philip Lowe, decided to reduce the cash rate by 25 basis points to 0.25 percent.

The bank will purchase government bonds in the secondary market and keep the yield on 3-year bonds at around 0.25 percent.

In order to support credit supply to small and medium-sized businesses, the RBA will provide a three-year funding facility to authorized deposit-taking institutions at a fixed rate of 0.25 percent.

Data from the Australian Bureau of Statistics showed that Australia unemployment rate came in at a seasonally adjusted 5.1 percent in February - beneath expectations for 5.3 percent, which would have been unchanged from the January reading.

The Australian economy added 26,700 jobs last month, beating forecasts for an increase of 6,300 jobs following the gain of 13,500 jobs in January.

The aussie dropped to 0.5506 against the greenback, its lowest level since October 2002. Next key support for the aussie is seen around the 0.54 level.

The aussie fell to an 11-year low of 59.87 against the yen from Wednesday's closing value of 62.33. The aussie is seen finding support around the 58.00 mark.

Data from the ministry of Internal Affairs and Communications showed that overall nationwide consumer prices in Japan were up 0.4 percent on year in February.

That was shy of expectations for an increase of 0.5 percent and was down from 0.7 percent in January.

The aussie depreciated to an 11-year low of 1.9799 against the euro from yesterday's closing quote of 1.8900. The aussie is likely to challenge support around the 2.00 region, if it drops again.

The aussie retreated to 1.0021 against the kiwi, from a 3-day high of 1.0160 seen at 8:45 pm ET. The next possible support for the aussie is seen around the 0.99 level.

Data from Statistics New Zealand showed that New Zealand's gross domestic product expanded a seasonally adjusted 0.5 percent on quarter in the fourth quarter of 2019.

That matched expectations and was down from the upwardly revised 0.8 percent gain in the three months prior.

The aussie slipped to an 11-year low of 0.8066 against the loonie, compared to 0.8378 hit late New York Wednesday. Further decline may see the aussie facing support around the 0.81 level.

Looking ahead, at 3:00 am ET, Swiss trade data for February will be out.

The Swiss National Bank's interest rate decision is due at 4:30 am ET. Economists expect the policy rate to remain unchanged at -0.75 percent.

Eurozone construction output for January is scheduled for release in the European session.

The U.S. weekly jobless claims for the week ended March 14 and leading index for February will be featured in the New York session.