Aussie dollar rallies, Asian currencies lift as China heads back to work

[SINGAPORE] Asian currencies lifted a little on Monday amid hints that the spread of the coronavirus could be slowing down and as some big businesses resumed work in China after the Lunar New Year break.

Workers began trickling back to offices and factories around the country as the government eased some restrictions on travel in the wake of the epidemic that has now killed more than 900 people, mostly on the mainland.

The Australian dollar rose 0.5 per cent to as high as US$0.6706, pulling away from a decade-low touched earlier in the session. It has lost 4.5 per cent this year.

The New Zealand dollar bounced 0.2 per cent from a two-month low to US$0.6410. The mood overshadowed strong US jobs data from last week and the euro and pound clawed back some lost ground on the greenback, each rising about 0.15 per cent.

The safe-haven yen softened slightly to 109.75 yen per US dollar, while bonds dipped and stock markets pared some early losses with the broad appetite for risk.

"We've seen positive headlines about a few large companies all reporting that they were going to be resuming and reopening facilities in China," said Richard Franulovich, head of FX strategy at Westpac in Sydney.

Taiwan's Foxconn, a major contractor in global technology production, received approval to resume production at a plant in China's north, one person with knowledge of the matter told Reuters.

Carmaker Tesla's Shanghai factory was due to resume production on Monday, a government official said last week, adding that authorities will provide assistance to the firm.

In further news over the weekend, the official daily update on the number of new infections in China reported fewer than 3,000 new cases for the first time since Feb 2.

That was tempered a little on Monday when the latest daily number of reported new cases again topped that benchmark at 3,062, but Mr Franulovich said that markets were for now focused on the positive.

The Chinese yuan rose 0.2 per cent to 6.9897 and pulled beaten-up Asian currencies with it.

The Korean won edged ahead while the Thai baht and Singapore dollar, which have all been heavily sold on virus fears, steadied their slide.

Kia Motors will suspend production at its three car plants in South Korea due to a shortage of parts, a company official said on Monday.

A large number of workplaces remain closed and many white-collar workers continue to work from home. On one of the usually busiest subway lines in Beijing, trains were largely empty.

"We're seeing some buying of AUD today, in line with some confidence coming back as the market rolls into latter Asia trade, but rallies are to be sold in my opinion," said Chris Weston, head of research at Melbourne brokerage Pepperstone.

Any hints of weakness in the local labour market, or a change of heart globally, could ramp up the chances of a rate cut by May, currently rated at about 40 per cent, Mr Weston said.

"If I were trading this from the short side, I would be adding to short positions on a close through 0.6656."

REUTERS