* Virus spread beyond China drives Fed rate repricing
* Cuts, not a hike, now expected in 2020
* Dollar pauses gains against Asian currencies
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Feb 25 (Reuters) - The dollar checked its march
higher on Tuesday, as investors sharply raised bets that the
growing fallout from the coronavirus outbreak would prompt U.S.
interest rate cuts.
That helped to stay a steep slide in Asian currencies that
has accompanied the virus' recent rapid spread beyond China and
allowed the pound GBP= and euro EUR= to drift slightly
higher.
The Australian AUD=D3 and New Zealand NZD=D3 dollars
were each about 0.2% stronger against the greenback. The Chinese
yuan CNY=CFXS rose 0.2% and the Korean won KRW= mostly
recouped heavy losses made on Tuesday. CNY/ EMRG/FRX
"Overnight there was a bit of panic over the risk of the
virus going global," said Bank of Singapore analyst Moh Siong
Sim. "I think we're back to assessing how this situation is
going to pan out from here...we're just taking it as it comes."
Countries around the world are stepping up efforts to
prevent a pandemic, as infections tick past 80,000 people, 10
times more cases than SARS.
Almost all of the infections are in China but recent sharp
rises in cases in South Korea, Italy and Iran sent markets into
a tailspin on Monday. MKTS/GLOB
Amid the turmoil, U.S. bond yields plunged and expectations
of rate hikes in the United States have vanished. for the Federal Reserve funds rate 0#FF: have
surged to instead price in a rate cut by June and more than 50
basis points of reductions by year end - pause for thought in
the recent rush to buy dollars.
"It's been quite dramatic," said Rodrigo Catril, senior FX
strategist at National Australia Bank in Sydney.
"We've seen not only a repricing of Fed expectations, but a
bigger re-pricing because the Fed is the one that can actually
do something in terms of moving the cash rate," he said.
Against a basket of currencies the dollar was a touch weaker
at 99.321 =USD . However, without much good news on the virus,
few expect the dollar to give back too much of its recent gains.
Japan's Prime Minister Shinzo Abe said on Tuesday that
clusters of cases had emerged there and that the government
would take stronger steps to fight contagion, giving Asian
investors another reason to stay cool on the yen. It traded only modestly stronger at 110.82 per dollar
JPY= .
China, meanwhile, reported a rise in new coronavirus cases
in Hubei province, the epicentre of the outbreak, even though
the rest of the country saw a fourth-straight day of declines.
South Korea, which has the most virus cases in Asia outside
China, reported 60 new cases on Tuesday, increasing the total
number of infected patients there to 893 - leaving few to expect
the region's currencies to do more than hold steady for now.
"Despite the Aussie/dollar holding up overnight, we see the
balance of risks to the downside," ANZ analysts said in a note.
That could add to the dollar's 5.7% rise against the Aussie
so far this year.