* Yen rises 0.7% vs dollar, jumps 1.4% on Aussie
* Money markets price 3 Fed cuts by June
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Feb 28 (Reuters) - The Japanese yen returned as a
beacon of safety on Friday, hitting a one-month high against the
dollar, as mounting fears the world was on the cusp of a
pandemic sent global financial markets into a tailspin.
Currency trading has been less panicky than the week's share
market plunge, but the mood is much the same and a jump in U.S.
rate cut expectations has only added to the yen's allure.
The yen JPY= rose 0.7% to a month-high of 108.85 per
dollar on Friday, leaving the greenback down 2.4% for the week,
its biggest loss on the Japanese currency in more than three
years.
Asia's export currencies were crunched. The Australian
dollar tanked 0.7% to a fresh 11-year low on the dollar and it
lost twice as much against the yen AUDJPY=R .
The New Zealand dollar fell 1% on the greenback and 1.7%
against the yen.
"We haven't found any reason to stabilise," said Westpac FX
analyst Sean Callow.
"Every half hour or so we get a new headline about a factory
closure, or a case in a country that hasn't had one
before...this sort of move, it feeds on itself."
Hopes the coronavirus outbreak could be contained in China
have vanished this week as infections spread around the globe.
The Aussie AUD=D3 last bought $0.6519 and the kiwi
NZD=D3 sat at a four-month low of $0.6233.
ANZ analysts said, if the outbreak worsened, the Aussie
could go as low as $0.58 and the kiwi to $0.55.
"The current degree of uncertainty makes it prudent to think
about where the AUD and NZD may fall," said ANZ FX head Daniel
Been.
SEISMIC SHIFT
While much is still unknown about the virus, measures to
contain it have wreaked havoc on supply chains, the world's
economy and financial markets. MKTS./GLOB
In currencies, the most marked shift this week has been the
pause in the dollar's advance as markets dramatically re-price
the chance of the U.S. Federal Reserve lowering interest rates.
Investors are now expecting three Fed cuts by mid-year
0#FF: , beginning with one in March which had been rated just a
9% chance a week ago. FEDWATCH
That sent the euro sharply higher overnight, as investors
unwind carry trades, and has offered a slight brake on the
massive flight from Asian currencies. But there are few other
places for money storming out of Asia to go.
"Until the virus data says otherwise, the trading strategies
should probably still err (towards safety)," Deutsche Bank
strategist Alan Ruskin said in a note. "Buy gold, short oil," he
said.
"Initially, the dollar weakness is expected to be only
modest versus alternatives like the yen, franc and euro; and,
the dollar should strengthen versus commodity FX and emerging
markets' currencies."
(Editing by Sam Holmes and Jacqueline Wong)