FOREX-Yen firm, riskier currencies wobble as policymakers grapple with pandemic

* Yen retains Monday's gains, euro almost flat
* Risk-sensitive Aussie under pressure, sterling at 5-month
low
* Coronavirus fears keep markets on edge

By Hideyuki Sano
TOKYO, March 17 (Reuters) - The safe-haven Japanese yen held
largely firm on Tuesday, while risk-sensitive currencies
struggled to stay afloat as coordinated moves by central banks
failed to quell investor trepidation over the spreading
coronovirus pandemic.
Global risk assets were routed over the past several days,
with turmoil engulfing many markets on worries the outbreak and
draconian containment measures could trigger steep recessions in
major economies.
As a result, trading in most markets including foreign
exchange is driven more by loss-reduction and other position
unwinding to reduce risks or make up for losses, rather than
fresh bids, market players said.
"Liquidity in financial markets has evaporated," ANZ
analysts said in a note to clients, adding that the "bold
concerted global central bank actions have not done enough to
settle markets."
The liquidity anxiety has hammered higher yielding
risk-sensitive currencies, such as the Australian dollar, while
those with negative yields, such as the yen, the euro and the
Swiss franc, have largely escaped the markets carnage.
The dollar traded at 106.33 yen JPY= , bouncing back from
Monday's low of 105.15, but still down 1.6% so far this week,
The euro last stood at $1.1167 EUR= , little changed after
wild gyrations on Monday.
The Australian dollar, with big exposure to commodities,
fetched $0.6102 AUD=D4 , down 0.3% in early trade, after having
hit an 11-year low of $0.60765 on Monday.
The Canadian dollar, which has strong correlation with oil
prices, sank to a four-year low of C$1.4020 per U.S dollar
CAD=D4 , as oil prices plummeted on a Saudi-instigated price
war.
U.S. benchmark oil futures CLc1 fell $3.03 to settle at
$28.70 a barrel, near a 4-year low.
The British pound is also under pressure, dogged by worries
about not only Britain's exit from the European Union but also
its sizable current account deficit.
Sterling traded at $1.2265 GBP=D4 , down 0.04% so far on
the day, having hit a five-month low of $1.2203.
A rout on Wall Street on Monday underscored fears over the
coronavirus crisis in the West as well as the Federal Reserve's
emergency move to slash rates on Sunday. But investors took the Fed action, joined by central banks
in Japan, Australia, New Zealand and elsewhere, as insufficient
given the pathogen's breakneck spread across the world which has
put many nations on virtual lockdowns.
Some analysts said the hasty moves may have backfired as
investors were spooked over the possible panic among
policymakers.
"Central banks are pressing the gas pedal to the floor. But
the car is bogged down in a quagmire that is called coronavirus,
so it won't move forward," said Ayako Sera, market strategist at
Sumitomo Mitsui Trust Bank.
"Until the outbreak stops, for investors, it is time for
patience," she said.
There is no clarity on that front, with global cases now
rising to 174,100 with 6,700 deaths, prompting countries to shut
borders and take increasingly drastic measures to try to reduce
the severity of the outbreak. Leaders of the Group of Seven wealthy democracies said they
were committed to doing "whatever is necessary" to battle the
coronavirus pandemic and to work together more closely to
protect public health, jobs and growth. Investors are also shunning many emerging market currencies.
MSCI emerging market currencies index .MIEM00000CUS
dropped to its lowest level since late 2018.