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.
Graphic: EURCHF chart
https://fingfx.thomsonreuters.com/
gfx/mkt/13/2080/2048/EURCHF%20chart.png
(Reporting by Saikat Chatterjee and Hideyuki Sano; editing by
Larry King and Timothy Heritage)
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