The Australian dollar rallied on the back of improving risk appetite on Wednesday as a sprinkling of better economic news at home and abroad helped shove aside worries over swine flu, at least for a few hours.
Yet the Aussie still had to negotiate the outcome of a Federal Reserve policy meeting and US gross domestic product (GDP) data that are likely to show the world's largest economy contracted sharply for a second straight quarter. The Australian dollar had bounced to $0.7145 in late trade, up from a $0.6990 low on Tuesday, though it remained well within its recent $0.6950 to $0.7240 trading range.
It also firmed to 69.20 yen, from Tuesday's 67.23 trough, as investors trimmed safe-haven positions in the Japanese currency. "After selling risk in the past few sessions, we have seen a bounce back, with carry currencies performing strongly through today's session," said analysts at Westpac.
"The tone was set from the positive data out in the US, which provided a boost to equity market sentiment and helped risk appetite turn higher." The Aussie had been hit earlier in the week by concerns the outbreak of swine flu could spread and impede a global recovery.