* Dollar recovers as risk aversion returns
* Gains most against AUD, NZD
* S&P cuts outlook on Australia's AAA rating
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, April 8 (Reuters) - The dollar found a footing on
Wednesday as investors returned to safe-havens, reversing some
risk currency gains made on hopes the coronavirus crisis in
Europe and New York was slowing.
The greenback rose on most majors, a day after suffering its
worst drop against a basket of currencies in nearly two weeks.
It was not enough to recoup the ground given in recent days,
but came after a sour end to trade on Wall Street on Tuesday and
as a two-day rally in Asia's equity markets ran out of puff.
MKTS/GLOB
The largest gains came against the risk-sensitive Australian
and New Zealand dollars, which each fell about 0.4%. AUD/
The Aussie AUD=D3 has now been repelled twice in as many
weeks from breaking past resistance at the 62-cent mark. It last
stood at $0.6137 and the kiwi NZD=D3 at $0.5962.
"It's a two steps forward, one step back situation," said
Bank of Singapore currency analyst Moh Siong Sim.
"Optimism has been driven by the sense that perhaps the
virus is turning for the better," he said. "But markets are
really concerned about the extent of the economic fallout which
is just starting to show up in the numbers."
The dollar, which for a month now has very closely tracked
risk appetite as investors and businesses fearing the worst have
rushed to the world's reserve currency, edged up on the pound,
euro, yen and Swiss franc.
It last stood 0.2% higher at $1.0871 per euro EUR= and the
same margin higher against the pound GBP= at $1.2315, though
remained well short of recovering falls made on Tuesday.
The greenback rose 0.2% on both the yen and franc to 108.93
yen JPY= and 0.9714 francs CHF= .
WATCHING WUHAN
A Reuters tally shows 81,451 coronavirus-related deaths
globally and nearly 1.4 million infections. British Prime
Minister Boris Johnson, who is infected, remains in intensive
care although his condition is stable. Meanwhile, there are signs of a levelling off of
hospitalisations in New York, and in Europe there are plans to
begin easing some of the lockdowns as fatalities have been
declining.
The Chinese city where the coronavirus epidemic first broke
out, Wuhan, ended a two-month lockdown on Wednesday, although a
northern town started restricting the movement of its residents
amid concerns of a second wave of infections.
"What we see and hear from Wuhan will be quite important for
whether any improvement in sentiment can be maintained," said
Ray Attrill, head of FX strategy at National Australia Bank.
"There is very keen interest in how willing Wuhan residents
are to get out and about, and hope there won't be evidence of
re-infections any time soon."
Mainland China's new coronavirus cases have doubled in 24
hours and new asymptomatic infections more than quadrupled,
while the economic cost of the pandemic becomes clearer.
Ratings agency S&P Global on Wednesday warned the cost of
combating the virus would weigh heavily on Australia's finances
and changed the outlook for the country's rating to negative.
Against a basket of currencies the dollar edged up 0.2% to
100.170 USD= and it rose 0.3% against the Chinese yuan CNY= .
CNY/
"While the virus' curve is flattening, the economic effects
of the corona crisis will linger for years," said Commonwealth
Bank of Australia currency analyst Joe Capurso.
"Economies will take time to re-open, some businesses will
not re-open, and unemployment will take years to (recover). We
think that means the dollar and yen will re-strengthen."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Tracking the spread of the novel coronavirus https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B59S39E/index.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Sam Holmes and Jacqueline Wong)