FOREX-Yuan steadies, sentiment still fragile as markets eye China virus, wait for Fed

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Risk assets hit on worries about China virus
* Yuan weak offshore, onshore trade closed for holidays
* Virus puts damper on global economic outlook

By Stanley White
TOKYO, Jan 28 (Reuters) - The yuan steadied a little after
slipping to its weakest level in a month in offshore trade on
Tuesday, but sentiment remained fragile on lingering anxiety
about the widening economic fallout from a new coronavirus in
China.
The Japanese yen, considered a safe-haven, traded near a
three-week high versus the dollar as investors nervously watched
the death toll from the virus climb to more than 100.
Currency markets were relatively subdued on Tuesday as some
investors retreated to the sidelines before a U.S. Federal
Reserve meeting.
Global stocks and oil prices have tumbled over recent
sessions on fears the virus could do further damage to China's
already weakened economy, an engine of global growth.
Chinese authorities have stepped up efforts to curb the
spread of the virus, imposing stiff restrictions on travel and
movement of people. Many of the largest Chinese cities in
central Hubei province, where the flu-like virus originated late
last year, are already on lockdown.
Scores of Chinese are cancelling travel plans during the
Lunar New Year, normally the busiest tourism season, while
businesses in many cities have shut down.
"We still do not know the full scale of this outbreak, which
is not only a public health problem but also an economic
problem," said Minori Uchida, head of global market research at
MUFG Bank in Tokyo.
"There are worries about the impact on tourism and China's
broader economy, which affect global economic growth forecasts.
The yuan is likely to be sold, and the yen is likely to rise."
In the offshore market, the yuan CNH=D3 was quoted at
6.9755 per dollar, pulling back slightly from its weakest since
Dec. 30. China's onshore markets are closed this week for Lunar
New Year.
The yen JPY=EBS held steady at 108.97 per dollar, close to
its strongest level since Jan. 8.
Japan's currency has risen for the past five trading
sessions against the greenback due to the growing risk aversion.
The dollar index .DXY against a basket of six major
currencies was little changed at 97.923 following a 0.86%
increase on Monday.
The coronavirus has spread to more than 10 countries. So far
no fatalities have been reported outside of China.
The outbreak has evoked memories of Severe Acute Respiratory
Syndrome (SARS) in 2002-2003, another coronavirus which broke
out in China and killed nearly 800 people in a global pandemic.
The U.S. dollar was little changed at $1.1023 per euro
EUR=EBS , close to its strongest since December.
Officials from the U.S. central bank are scheduled to meet
on Tuesday and Wednesday. They are expected to reiterate the
Federal Reserve's desire to keep rates unchanged at least
through this year.
The Australian dollar AUD=D3 traded at $0.6761, close to a
three-month low. The New Zealand dollar NZD=D3 was quoted at
$0.6547 after falling on Monday to its lowest since
mid-December.
Both countries have extensive trade ties with China, with
tourism and education especially vulnerable to disruption from
the virus.
The Bank of England announces a policy decision on Thursday
that many analysts say is too close to call.
The pound GBP=D3 was little changed at $1.3058 on the
dollar and at 84.43 pence per euro EURGBP=D3 .
Dovish comments from BoE policymakers have fuelled some
expectations for monetary easing, but improving economic data
has cast doubt on this view.