* Euro knocked off five-week high
* Yen, Swiss franc gain as investors still see uncertainty
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, March 3 (Reuters) - The safe-haven Japanese yen and
Swiss franc gained on the dollar on Tuesday, as investors
tempered hopes for the impact of global monetary easing with
concern about how much it can do to combat the economic damage
from the coronavirus outbreak.
Global stocks and oil rallied on Tuesday, and safe havens --
gold, the yen, and the franc -- were standouts as risk appetite
grew in anticipation of stimulus from central banks.
G7 finance ministers and central bank governors hold a
conference call later on Tuesday to discuss how to deal with the
outbreak and its economic fallout. The call, which French and Italian sources said begins at
1200 GMT, will comes with markets already betting the U.S.
Federal Reserve will lead a round of global monetary easing.
MKTS/GLOB
The dollar fell as much 0.5% to 107.67 yen JPY= and to
0.9573 francs CHF= after Reuters reported, citing an unnamed
G7 official, that the G7 draft statement had no fresh fiscal or
monetary pledges.
"For many investors there is the view, perhaps, that central
banks can do a lot to help the symptoms of this crisis but
they're not going to entirely make it go away," said Jane Foley,
currency strategist at Rabobank in London.
"There is going to be uncertainty about the economic impact
of this virus, and given that, there will be safe haven demand."
In a statement, expected on Tuesday or Wednesday, the G7
countries will pledge to work together to mitigate damage to
their economies, without giving specifics, a source with
knowledge of the draft told Reuters on condition of anonymity.
That leaves investors again confronting fundamentals: The
virus and the economic slowdown it is causing will hurt, and the
damage looks as if it won't be confined to China-exposed assets.
The extra room to respond in the United States, where the
Federal Reserve's benchmark rate is 1.5% to 1.75% compared with
zero in Europe, has weighed on the dollar.
However, after the European Central Bank said it was ready
to take "targeted" steps to fight virus's effects euro fell from a five-week high on Tuesday.
The dollar index was 0.1% higher at 97.641 =USD and the
euro was 0.2% lower at $1.111 EUR=
The Australian dollar AUD=D3 gained after the Reserve Bank
of Australia (RBA) cut interest rates by only 25 basis points,
as anticipated. Markets had priced the possibility of a larger
cut. "Assurances of easier liquidity and fiscal support may help
stabilise the sentiment in the very short term, but the risk of
a higher rate of COVID-19 infections needs to be monitored
closely," Citi EM Asia economist Johanna Chua said in a note.
"The situation remains fluid and a lot depends on how
successful the G7 conference call is in keeping up with the
expectations of coordinated easing."
Also due are euro zone inflation data at 1000 GMT and the
Super Tuesday Democratic Party primaries in the United States.
The Bank of Canada meets to set its policy rate on Wednesday.
World markets performance https://tmsnrt.rs/37RShMa
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