* Investors bet on Fed rate cut at March 17-18 meeting or
earlier
* U.S. manufacturing activity weakens in February
* Sterling under pressure as Brexit talks begin
(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, March 2 (Reuters) - The U.S. dollar slipped to a
six-week low against a basket of currencies on Monday, as
investors bet on the U.S. Federal Reserve easing policy in a bid
to counter the negative impact from the spread of the new
coronavirus.
The dollar index, which measures the greenback's strength
against a basket of six other major currencies, was 0.53% lower
at 97.448. Earlier it slipped to a low of 97.176, its lowest
since Jan. 16.
Global risk assets, including equities, were hammered hard
last week as investors worried about the economic impact of the
global spread of the virus.
The panic in global markets prompted U.S. Federal Reserve
Chairman Jerome Powell to issue a statement on Friday saying the
Fed would "act as appropriate" to support the economy.
Investors took his comments as a hint that the Fed will
deliver a cut when it meets March 17-18, and as an encouragement
to central banks around the world to follow suit. Futures
0#FF: now imply a 50 basis point cut at the meeting.
"The negative for the dollar is that the Fed has more leeway
than many rival central banks to shock and awe with policy,
steps that could do material damage to the currency's allure,"
said Joe Manimbo, senior market analyst at Western Union
Business Solutions.
U.S. manufacturing activity slowed in February as the supply
chain disruptions arising from the coronavirus outbreak dragged
on output and new orders, surveys of purchasing managers showed
on Monday. The damage to global markets due to the spread of the
coronavirus has raised hopes of a coordinated policy action from
global monetary authorities.
But policymakers at the European Central Bank, including its
president, Christine Lagarde, have shown reluctance to cut rates
from the current minus 0.5%.
On Monday, the euro was up 1.13% against the dollar.
The yen, which tends to draw investors during times of
geopolitical or financial stress as Japan is the worlds biggest
creditor nation, was up 0.1% against the dollar despite Bank of
Japan Governor Haruhiko Kuroda saying the BOJ would take
necessary steps to stabilize financial markets. Sterling fell broadly, hitting a new four-and-a-half month
low against a strengthening euro as traders took a cautious view
at the start of talks between Britain and the European Union on
their relationship after Brexit.
Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
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