* Dollar steadies slide, but struggles to advance
* Yen inches higher on virus fears
* Aussie, kiwi halt recent rises
* Track the coronavirus on Eikon here https://apac1.apps.cp.extranet.thomsonreuters.biz/cms/?navid=919104201
By Tom Westbrook
SINGAPORE, March 5 (Reuters) - The dollar struggled to make
headway on Thursday, as very low U.S. yields and the prospect of
even more monetary easing held back gains, while virus fears
supported the safe-haven yen.
Strong data showing U.S. services activity at a one-year
high and hiring growth had pushed the greenback 0.3% higher on
the euro overnight. But with benchmark U.S. 10-year yields US10YT=RR just a
tad above 1% and futures markets pricing another 50 basis points
of Federal Reserve cuts by July 0#FF: , the greenback failed to
forge ahead in Asia, leaving the euro EUR= steady at $1.1136.
"The ongoing decline in U.S. yields and the rise in
volatility is continuing to cause a position squeeze," said Ray
Attrill, head of FX strategy at National Australia Bank.
"Assuming that the Fed is going to enact several more rate
cuts in the next month or two - including out of the 17-18 March
meeting, then for the short term at least there is some further
weakness in the U.S. dollar to play out."
An emergency 50 basis point interest rate cut by the Fed on
Tuesday had sent the dollar backwards against most Asian
currencies and down to a five-month low of 106.84 yen.
MKTS/GLOB
The strong performance of former Vice President Joe Biden in
the Democratic nomination campaign had pulled the dollar firmer
than that overnight, with an increase in risk appetite drawing
investors away from the safety of the Japanese currency.
Biden is considered less likely to raise taxes and impose
new regulations on business than rival Bernie Sanders.
But deep concern about the widening economic fallout from
the coronavirus outbreak had the yen rising 0.2% through
Thursday and last trading at 107.33 per dollar JPY= .
Mainland China reported a rise in new infections on
Thursday, deaths are mounting deaths globally, Italy has closed
its schools and California has declared a state of emergency as
cases there increase. The International Monetary Fund now expects world growth
will drop to its slowest since the 2008-2009 financial crisis.
All of which, combined with the expectation of more monetary
easing to offset the damage, snuffed a rally in the Australian
and New Zealand dollars. AUD/
The Aussie AUD=D3 , which has climbed nearly 3% from an
11-year low hit last week, eased to $0.6619. The kiwi NZD=D3 ,
which has climbed almost 2% from a Monday trough, sat at
$0.6297.
"The talk of the town now is what does quantitative easing
look like in Australia, when is it likely to be deployed and how
much of that is priced in," said Chris Weston, head of research
at Melbourne brokerage Pepperstone.
Central bank action also weighed on the Canadian dollar,
which slipped lower after the Bank of Canada delivered its
biggest interest rate cut in more than 10 years. The loonie CAD=D3 last traded at 1.3396 per dollar.
The British pound held overnight gains after the incoming
Bank of England governor said he would wait for more clarity
about the virus before moving interest rates, rather than
rushing to an emergency cut. The pound last bought $1.2873 GBP= and traded at 86.51
pence per euro EURGBP= .
Major currencies vs dollar https://tmsnrt.rs/39l3Hc2
AFX vs USD https://tmsnrt.rs/38qPV6k
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