FOREX-Dollar holds gains after Fed expresses virus concerns

(New throughout)
By Kate Duguid
NEW YORK, Jan 29 (Reuters) - The U.S. dollar index hovered
near two-month highs on Wednesday after Federal Reserve Chair
Jay Powell expressed concerns about the economic fallout of the
coronavirus at a news conference following the central bank's
announcement it would leave interest rates unchanged.
Demand for the dollar index .DXY has risen as investors
uncertain about the impact of the outbreak have sought out
safe-haven assets. In the last two weeks, the index has risen
0.73%, the Japanese yen JPY= has risen 0.81% and the Swiss
franc CHF= has risen 0.69%.
The dollar index was last up 0.08% to 98.096, having earlier
on Wednesday hit its highest since Dec. 2.
While the sell-off of risk assets in financial markets has
moderated in recent days, Powell's remarks about the virus bid
up the dollar after it had briefly dipped into negative
territory.
"He's bringing up the coronavirus. We knew he was going to,
but it's one of those things - it's a nagging news story where
there's a ton of uncertainty surrounding it," said John Doyle,
vice president of dealing and trading at Tempus, Inc.
The Fed held interest rates steady on Wednesday at its first
policy meeting of the year, with Powell pointing to continued
moderate economic growth and a "strong" job market, and giving
no sign of any imminent changes in borrowing costs. But, he added, "uncertainties about the outlook remain,
including those posed by the new coronavirus."
"We are very carefully monitoring the situation," Powell
said, adding that while the implications of the outbreak for
China's output are clear, it is "too early" to determine its
global effect or impact on the U.S. economic outlook.
"A lot of the uncertainties that we were worried about in
2019 are gone - we have the phase one trade deal, it looks like
impeachment is not going to be much of anything - and so the Fed
is on hold," said Doyle. "What's going to get in the way?"
"Potentially that's this coronavirus."
The yen JPY= was last 0.05% stronger at 109.08 per dollar.
Against the euro the yen EURJPY= was 0.21% stronger at 120.04.
The offshore Chinese yuan CNH= - heavily sold in recent
days - was modestly weaker, down 0.05% on the day last trading
at 6.968. The Australian dollar AUD= , which is highly exposed
to the Chinese economy, has fallen 1.16% just this week, and was
last down 0.19% at 0.675.