* Dollar, yen, Swiss franc in demand as safe-havens
* Aussie flirts with 3-1/2-month low, euro near 2-month low
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, Jan 30 (Reuters) - The dollar held near a two-month
high against a basket of major currencies while the Australian
dollar and the yuan were under pressure on Thursday as investors
tried to shield themselves from assets that could be hit by
China's virus epidemic.
The U.S. Federal Reserve, while keeping interest rates on
hold as expected on Wednesday, also cited the virus as a source
of uncertainty for the economic outlook. As the new pneumonia-like disease spread quickly in China
and many of its trade partners in Asia and Europe, the dollar is
emerging as an ultimate safe-haven destination.
The dollar is the best performing currency among G10
currencies so far this month, with the dollar index =USD
rising 1.6% in January to hit a two-month high.
It last stood at 98.033, flat on the day but not far from
Wednesday's two-month high of 98.037.
The yen and the Swiss franc, traditional safe-haven
currencies, ranked a close second and third.
The yen traded at 109.06 yen per dollar JPY= , having
gained 0.14% the previous day. The Japanese currency was down
0.3% against the dollar so far this month.
The Swiss franc CHF= changed hands at 0.9729 franc per
dollar.
"The overall market is neither clear-cut risk-on nor
risk-off. But in the currency market, the dollar, the yen and
the Swiss franc are clearly favoured now," said Minori Uchida,
chief currency analyst at MUFG Bank.
"While it is highly uncertain how much the disease will
spread and how hard it will hit the economy, downgrades to the
Chinese economy looks inevitable."
China's economic growth may drop to 5% or even lower due to
the coronavirus outbreak, possibly pushing policymakers into
introduce more stimulus measures, a government economist said in
remarks published on Wednesday. That would deal a severe blow to other economies that rely
heavily to Chinese demand.
The Australian dollar fetched $0.6751 AUD=D4 , having hit a
3-1/2-month low of $0.67355 in the previous session.
The euro stood at $1.1009 EUR= , having touched a two-month
low of $1.0992 in U.S. trade on Wednesday.
The offshore yuan steadied for now, trading at 6.9730 yuan
per dollar CNH= , above the one-month low of 6.9900 touched on
Monday.
Elsewhere, sterling traded unchanged at $1.3016 GBP=D4
ahead of the Bank of England's policy decision later in the day.
Though expectations of a rate cut have substantially dropped
after some robust data last week, they still remain almost 50%,
suggesting the rate decision is likely to move the pound
whichever way the BoE will go.
The European Parliament gave final approval to Britain's
divorce from the European Union on Wednesday, paving the way for
the country to quit the bloc on Friday after nearly half a
century and delivering a major setback for European integration.