The dollar held near a four-month high on Wednesday amid hopes the spread of the coronavirus had slowed, with the New Zealand dollar gaining after the central bank dropped a bias towards lowering interest rates.

Across mainland China 2,015 new cases of coronavirus were confirmed as of Tuesday, the lowest daily rise since January 30. China's senior medical adviser also said the outbreak might be over by April.

The slowdown in the number of new cases encouraged investors to resume seeking yields. The dollar has benefited from that approach, thanks to its relatively high interest rates. For example, spreads between US and German 10-year bond yields are holding at a more than two-year highs above 200 basis points.

“The steady improvement in risk appetite is helping markets, and expectations that central banks will not rush into tightening policy anytime soon is also boosting sentiment,” said Manuel Oliveri, an FX strategist at Credit Agricole in London.

Against a basket of major currencies, the dollar edged 0.1 per cent higher at 98.77, just below a four-month high of 98.95 hit in the previous session.

The coronavirus epidemic has upended China's economy, the world's second-largest. In foreign-exchange markets, export-oriented currencies such as the Norwegian crown and Swedish crown have come under some pressure as the virus spread.

The Norwegian crown has weakened more than 5 per cent so far in 2020. Sweden's crown has fallen by 2.6 per cent.

The New Zealand dollar jumped 0.8 per cent to $0.6462, its biggest rise in two months, after the central bank removed the chance of a rate cut from its forward projections.

Recession fears in Europe dragged the euro to a four-month low overnight. It has since recovered to trade flat at $1.0915.

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