* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Tracking the coronavirus: https://tmsnrt.rs/3aIRuz7
* Fed rate cut fails to stabilise equities
* Coronavirus roils financial markets
* Dollar sold as investors bet more easing is likely
By Stanley White
TOKYO, March 4 (Reuters) - The dollar hovered near
five-month lows versus the yen on Wednesday after the U.S.
Federal Reserve's emergency 50 basis point rate cut sparked more
anxiety about the impact of the coronavirus and sent Treasury
yields tumbling to record lows.
The greenback also traded near the lowest in almost two
years against the Swiss franc as investors flocked to
traditional safe havens as rate cuts were deemed insufficient to
offset risks posed by the global spread of the coronavirus.
The euro was one of the currencies to benefit most from the
broad-based dollar weakness as traders bet the Fed will cut
rates more than the European Central Bank.
Disappointment that a Group of Seven statement on Tuesday
did not lay out a specific response to a global slowdown caused
by the coronavirus has reinforced the view among some investors
that policymakers have fallen behind the curve.
"The G7 and the Fed were not enough to support markets,"
said Masafumi Yamamoto, chief currency strategist at Mizuho
Securities in Tokyo.
"This Fed rate cut is bad for dollar/yen, partly because
Treasury yields are now very low. The dollar's weakness is
reflected in the euro, because the Fed will likely ease more
than the ECB."
The dollar fell to 106.85 yen JPY=EBS in Asia on
Wednesday, its lowest in almost five months, and then steadied
at 107.26 yen.
The greenback bought 0.9561 Swiss franc CHF=EBS , close to
its weakest level in almost two years.
The Fed surprised investors by cutting rates by 50 basis
points to a target range of 1.00% to 1.25% on Tuesday, two weeks
ahead of a regularly scheduled policy meeting. Interest rate futures traders were pricing in a 60%
probability of a further 25 basis point cut in April, according
to the CME Group's FedWatch Tool.
The rate cut failed to arrest a sell-off in U.S. equities
and sent benchmark 10-year Treasury yields US10YT=RR crashing
to a record low of 0.906%, further reducing the appeal of the
dollar.
The new coronavirus that emerged in China late last year has
spread to more than 60 countries and claimed more than 3,000
lives. Travel restrictions and factory closures aimed at halting
the spread of the virus raise the risk of a global recession.
Sentiment also took at a hit after G7 finance ministers
issued a statement on Tuesday that stopped short of calling for
new government spending or coordinated central bank interest
rate cuts. In the onshore market, the yuan CNY=CFXS jumped to a
six-week high of 6.9400 per dollar in another sign of the U.S.
currency's weak bias.
The yuan shrugged off data showing China's services sector
crumbled to its weakest on record in February, but the grim
numbers offer a sign of the economic impact of the spread of the
flu-like virus. Elsewhere, the Australian dollar AUD=D3 pared gains to
trade at $0.6492 as the weak Chinese data took some of the shine
off the Aussie, whose economy is highly dependant on trade with
China.
Broad-based selling in the U.S. dollar encouraged euro bulls
to aggressively buy the common currency.
The euro EUR=EBS last traded at $1.1166, close to a
one-month high reached on Tuesday.
Against sterling, the euro EURGBP=D3 traded at 87.10
pence, close to the highest in almost four months.
Sterling GBP=D3 bought $1.2831, holding onto modest gains
from the previous session.
Uncertainty about trade talks between Britain and the
European Union is weighing on sterling, along with growing
expectations for UK interest rate cuts.
Money markets are now fully pricing in a cut of 25 basis
points on March 26 when the Bank of England next meets.
Almost two cuts are priced by the end of 2020, compared to
none a few weeks ago. BOEWATCH=
(Editing by Lincoln Feast and Jacqueline Wong)