By Saikat Chatterjee
LONDON, Feb 13 (Reuters) - The euro fell to a
four-and-a-half-year low against the Swiss franc on Thursday and
the yen strengthened as investors sought safe havens after
China's Hubei province, the epicentre of the coronavirus
outbreak, reported a sharp rise in the number of new cases.
Though broad risk-off sentiment was the main theme in
London trading, traders were looking to take positions in
riskier currencies as the jump in new cases was a result of a
new approach in diagnosis, aimed at bringing forward the
detection timeline and lowering the overall mortality rate.
Using a new method of diagnosis, the province reported on
Thursday 14,840 new cases of the virus as of Feb. 12, up from
1,638 new cases on Tuesday. The number of deaths in the province
rose by 242, a daily record, to 1,310. "The overnight news is still dominating risk appetite but
the market is looking for a reversal and some of the currencies
that have come under some selling pressure can rebound smartly,
for example, the Norwegian crown," said Manuel Oliveri, a
currency strategist at Credit Agricole in London.
After weakening to a three-and-a-half-week low a day
earlier, the yen gained 0.3% against the dollar on Thursday
JPY=EBS to 109.770 yen and climbed to a four-month high versus
the euro EURJPY=EBS .
The euro dipped to 1.0622 francs, below its 2016 trough of
1.0623 and its lowest level since August 2015. It last stood
around 1.06235 EURCHF= .
The franc's gains come at a time when its correlation with
risky assets has broken down in recent weeks and market watchers
say the Swiss currency may be primed for more gains if sentiment
towards the euro deteriorates further.
"When you see numbers like this, you can't help but move to
risk-off trades, which means buy the yen and sell stocks," said
Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in
Tokyo.
In the onshore market, the yuan CNY=CFXS slipped 0.13% to
6.9809 per dollar. The offshore yuan CNH=D3 dropped 0.14% to
6.9830.
The Australian dollar AUD=D3 , widely used as a proxy for
risk on Chinese assets, fell 0.22% to $0.6724. The New Zealand
dollar NZD=D3 slipped 0.2% to $0.6453.
Broadly, the dollar held near a four-month high .DXY
against a basket of its rivals ahead of U.S inflation data.
While data is expected to show a slight moderation in
monthly U.S. price data for January, market watchers say a pick
up in price pressures could boost the dollar and undermine risk
appetite.
EURCHF chart https://tmsnrt.rs/2ORwXPl
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