The Australian dollar was slightly lower against the US dollar on Tuesday afternoon in an impressive turnaround from 3-month lows reached earlier in the day. The rebound coincided with stock markets turning higher after a big 2-day plunge took Wall Street into negative territory year-to-date.
AUD/USD was lower by 12 pips (-0.17%) to 0.6748 with a daily price range of 0.674 to 0.677 as of 2.30pm GMT. In a choppy day of trading, the currency pair reversed early losses to turn positive but slipped again to turn slightly negative in the afternoon.
The US dollar
Risker currencies, including the forint stand a chance of recovering some of the recent losses once there are signs that the coronavirus infection rate is slowing. However, recent reports regarding the poor quality of healthcare being received by potential victims of the coronavirus in Wuhan has people alarmed. Locals interviewed by Reuters have commented on the unavailability of testing kits and inadequate quarantine conditions.
The US dollar has been part of a small cohort of haven currencies, including the yen and Swiss franc seeing demand amid the coronavirus outbreak in China this week. On Tuesday there was some evidence that market sentiment was turning with haven currencies off recent peaks and riskier currencies like the Australian dollar bouncing strongly off lows of the day.
The lift in sentiment comes after virus expert Zhong Nanshan, who leads the health commission team investigating the outbreak of the coronavirus (officially named 2019nCov) said the number of people infected will peak between one week and ten days.
The dollar lost some of its shine after some disappointing economic data suggested there is still a long way to go before US factories are back on their feet following a multi-month contraction. On Tuesday data showed US durable good orders for December rose 2.4% but that Non-defence Capital Goods Orders ex Aircraft fell -0.9% when no change was expected.