* Euro hurt by poor German data, worst week since November
* Markets focus on U.S. non-farm payrolls report
* Coronavirus fears keep sentiment fragile
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
LONDON, Feb 7 (Reuters) - The euro fell to its lowest since
October on Friday after German industrial output for December
recorded its biggest decline in a decade and strong employment
numbers in the United States encouraged investors to buy the
dollar.
The dollar has gained in recent sessions from solid data and
because of fragile risk sentiment, as investors gauge the
economic ramifications from the coronavirus outbreak in China,
where the death toll continues to climb.
The focus for Friday is non-farm payrolls data, which are
expected to confirm that the U.S. labour market is in robust
health.
MUFG analyst Derek Halpenny said weak data in Germany
undermined European Central Bank President Christine Lagarde's
comments on Thursday that the euro zone economy was stabilising.
"The hard data sits inconsistently with most sentiment data
pointing to some improvement. But the political line that
`recovery is coming' is losing credibility fast," Halpenny said.
"The October 2019 low of $1.0879 is now a credible near-term
target given the scale of weakness in the German data,
especially if the much-anticipated improvement in the
coronavirus outlook fails to materialise."
Elsewhere, the offshore yuan slipped 0.2% to 6.99 yuan per
dollar CNH=EBS but remained below the 7 level it crossed
earlier this week. The offshore yuan was headed for a small gain
this week, supported by central bank stimulus and China's
announcement on Thursday of tariff cuts on U.S. imports.
The Australian dollar, often seen as a proxy for China,
weakened 0.5% to $0.6699 AUD=D3 after the Reserve Bank of
Australia slashed growth forecasts in its quarterly economic
outlook, blaming bushfires and the coronavirus. The U.S. dollar traded at 109.9 yen JPY=EBS on Friday,
just below a two-week high reached earlier. For the week, the
dollar was on course for a 1.5% gain versus the yen, which would
be its biggest weekly gain since July 2018.
The dollar index, which measures the currency against a
basket of rivals, edged 0.1% higher .DXY to 98.557, near its
strongest since mid-October.
Sterling traded near a six-week low against the dollar and
fell against the euro. It was headed for its worst week since
the aftermath of the December general election, dogged by
persistent worries about negotiations between Britain and the
European Union for a post-Brexit trade deal.
The pound was last down at $1.2923 GBP=D3 . It staged a
small recovery against the euro, rising 0.1% to 84.86 pence
EURGBP=D3 .