February 3, 2020 / 3:28 PM / 19 days ago

FOREX-Yen, Swiss franc fall as China takes measures to ease virus impact

    * Yen, Swiss franc weakness signals ebbing virus fears
    * Offshore yuan at seven-week low, euro dragged downwards 
    * China cuts reverse repo rates, injects liquidity
    * Sterling tumbles after UK PM takes tough line in EU talks
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds new comment, U.S. data, FX table, updates
prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 3 (Reuters) - The safe-haven yen and Swiss
franc retreated on Monday, as risk sentiment improved and fears
about the coronavirus eased after China took measures to cushion
the impact of the new epidemic and pledged to do more to contain
it and support the country's financial markets.
    China's offshore yuan dropped to a more than seven-week low
against the U.S. dollar on Monday, but trimmed its losses as New
York trading got underway.
    After rising to multi-week highs against the dollar last
week in the face of the coronavirus scare, the yen and Swiss
franc took a pause from their climb as markets cheered China's
efforts.
    China's central bank unexpectedly lowered interest rates on
reverse repurchase agreements by 10 basis points and injected
1.2 trillion yuan ($174 billion) worth of liquidity into the
markets via reverse repo operations on Monday.

    Chinese authorities also pledged to use various monetary
policy tools to ensure liquidity remains reasonably ample and to
support firms affected by the virus epidemic, which has so far
claimed 305 lives, all but one in China.
    "Traders are looking for value where they can," said Karl
Schamotta, chief market strategist, at Cambridge Global
Payments, in Toronto. "A large part of what we're seeing in the
market today is bargain-hunting in anticipation of a return to
stimulus from the Chinese government."
    Chinese markets took a beating in the first trading session
after an extended Lunar New Year break. The offshore yuan
dropped as low as 7.023 yuan per dollar. The dollar
was last up 0.2% against the Chinese currency.
    The dollar also rallied more than 1% against the onshore
yuan from levels before the holiday to 7.0155 yuan.
    In morning trading, the dollar rose 0.3% against the yen to
108.66 , off a three-week low set on Friday.
    The dollar extended gains versus the yen after data showed
the Institute for Supply Management's U.S. manufacturing index
rose in January.
    The Swiss franc also fell against the dollar, which climbed
0.3% to 0.9662 franc.
    Gains against the yen and Swiss franc pushed the dollar
index higher, which was last up 0.4% at 97.797.
    The euro also fell 0.4% versus the dollar to $1.1044.
    The Australian dollar was up 0.1% at US$0.6697, 
holding near a 10-1/2-year low of $0.6670 touched last October.
    The currency is often regarded as a proxy for the yuan,
being more freely traded and because of Australia's reliance on
trade with China.
    Sterling, meanwhile, tumbled after Britain laid out a tough
opening stance for future talks with the European Union
following its departure from the bloc last week.

    Sterling was last down 1.3% at $1.3030, retracing 
all of its gains following the Bank of England's decision last
week to keep interest rates on hold. 
    
    ========================================================
    Currency bid prices at 10:06AM (1506 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1046        $1.1093     -0.42%         -1.47%      +1.1095     +1.1037
 Dollar/Yen       JPY=        108.6400       108.3800    +0.24%         -0.20%      +108.7800   +108.3200
 Euro/Yen         EURJPY=     120.04         120.20      -0.13%         -1.57%      +120.3700   +119.9300
 Dollar/Swiss     CHF=        0.9659         0.9630      +0.30%         -0.19%      +0.9668     +0.9631
 Sterling/Dollar  GBP=        1.3021         1.3199      -1.35%         -1.80%      +1.3214     +1.3021
 Dollar/Canadian  CAD=        1.3241         1.3235      +0.05%         +1.97%      +1.3255     +1.3228
 Australian/Doll  AUD=        0.6700         0.6691      +0.13%         -4.60%      +0.6707     +0.6682
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0671         1.0688      -0.16%         -1.67%      +1.0693     +1.0664
 Euro/Sterling    EURGBP=     0.8481         0.8400      +0.96%         +0.31%      +0.8486     +0.8401
 NZ               NZD=        0.6471         0.6462      +0.14%         -3.93%      +0.6476     +0.6454
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.2590         9.1991      +0.65%         +5.47%      +9.2833     +9.1852
 Euro/Norway      EURNOK=     10.2280        10.2180     +0.10%         +3.97%      +10.2740    +10.1748
 Dollar/Sweden    SEK=        9.6550         9.6261      -0.07%         +3.30%      +9.6639     +9.6167
 Euro/Sweden      EURSEK=     10.6675        10.6747     -0.07%         +1.89%      +10.6911    +10.6510
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Dhara Ranasinghe in London; Editing by Steve Orlofsky)
  
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