By Swati Pandey
SYDNEY, Feb 14 (Reuters) - The Australian and New Zealand dollars are set for their first weekly gain in six though doubts over whether a new viral epidemic spreading from China can be controlled have kept investors on the edge.
The Australian dollar AUD=D4 rose 0.1% to $0.6725 on Friday after easing 0.3% the previous day as major global currencies wavered after China reported a steep rise in new coronavirus cases and deaths.
Encouragingly, the daily death toll in the Chinese province of Hubei halved on Friday while passengers on a cruise ship blocked from five countries due to virus fears finally disembarked in Cambodia. the week, the Aussie is set for its best performance since a 1.1% gain in late December.
"We expect uncertainty around the numbers of identified cases to continue," analysts at ANZ said in a note.
"While easing geopolitical risks and accommodative global policy have been supportive, only a globally synchronous rise in growth would lift the AUD much above current levels."
With the coronavirus outbreak expected to hit economic activity in China, the risks to growth was titled to the downside for the first quarter, ANZ added.
"Given the elevated tail risks, our bias remains defensive."
For Australian investors a key focus will be on January employment data due next Thursday where a rise in the jobless rate could see the Aussie slipping.
The Reserve Bank of Australia (RBA) is keeping a close eye on the labour force data, saying the case for further policy easing would become stronger if the unemployment rate ticked higher.
The New Zealand dollar NZD=D4 was barely changed at $0.6437.
The kiwi is up 0.6% for the week, after six straight weekly losses. The currency posted its biggest one-day percentage jump since early February on Wednesday as New Zealand's central bank took a surprisingly hawkish tilt after holding rates at an all-time low of 1%. antipodean currencies held near multi-week highs against the euro EURAUD=R EURNZD=R ahead of the release of gross domestic product data from Germany and the euro zone later in the day.
Sentiment for the euro worsened this weak after data showing a plunge in euro zone manufacturing output reinforced expectations that monetary policy will remain accommodative. New Zealand government bonds 0#NZTSY= rose, sending yields about 3 basis points lower across the curve.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 unchanged at 99.27 and the 10-year contract YTCc1 down 2 ticks at 98.925. (Editing by Sam Holmes)