(Corrects price level for euro in para 17 to $1.1288, not
$1.288)
* Dollar falls 1% vs yen, 0.5% vs euro
* Futures market prices 100 bps of easing next week
* ECB awaited at 1230 GMT
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, March 12 (Reuters) - The dollar slid in another
seismic shift to price in more U.S. interest rate cuts on
Thursday, after President Donald Trump disappointed markets with
a coronavirus plan light on details.
The greenback dropped 1% to 103.32 yen JPY= , fell as much
as 0.6% to $1.1333 against the euro EUR= and lost 0.6% to the
safe-haven Swiss franc CHF= , while stocks plunged. MKTS/GLOB
Trump announced on Wednesday a ban on travellers from 26
European countries entering the United States for a month.
He unveiled economic steps to counter the virus but his
address from the Oval Office was light on medical measures
beyond assurances that "the virus has no chance against us".
"The market was looking for more," said Moh Siong Sim,
currency strategist at the Bank of Singapore.
"A travel ban is part of the solution, but the more
important parts are still missing. They are really the public
health measures: Paid sick leave, free testing, free treatment,"
he said.
"The market is right now looking for perhaps more action
from the Fed, given the disappointment from the White House."
Indeed, futures markets reacted swiftly. They are now
pricing in the U.S. Federal Reserve moving the lower end of its
benchmark funding band to zero when it meets next week, if not
before. 0#FF:
"The deflationary shock that we had assumed would trigger a
U.S. entry into the zero-yield world is turning out to be a
combo of trade war, oil price war and COVID-19 virus," J.P.
Morgan's long-term strategists Jan Loeys and Shiny Kundu said in
a note.
"(There are) close to even odds now of an official U.S.
recession this year."
Trump's address came with markets already in turmoil amid a
string of increasingly dire news on the coronavirus.
The longest bull run in U.S. stockmarket history has ended,
with market talk that selling to cover margin calls was keeping
gold and bonds from rallying. .N
The World Health Organization overnight described the
outbreak as a pandemic. Italy, where deaths rose by nearly a
third overnight, has shuttered all shops except supermarkets,
food stores and pharmacies. Australia on Wednesday announced an $11.4 billion stimulus
package including wage subsidies and cash payments to small
businesses - though the Aussie AUD=D3 slid further with the
mood and growing recession fears. AUD/
Investors are now waiting to see how aggressively the
European Central Bank acts at its meeting later on Thursday.
Investors expect a cut to the main deposit rate by 10 basis
points. But it is no certainty since rates are already at a
record-low -0.5% and further cuts could hurt bank margins and so
squeeze lending. A press conference is due at 1230 GMT in Frankfurt, after
the monetary policy meeting. The euro steadied around $1.1288 in
the meantime.
"There's a sense to which currency markets are going to
reward the currencies of countries that are seen to be using
whatever space they've got for easier fiscal and monetary
policy," said Ray Attrill, head of FX strategy at NAB.
"(But) even if the ECB wheel out a cocktail of lower rates,
stepped up QE, more long-term ... in itself, that's not going to
inspire a huge amount of confidence that the eurozone economy is
going to escape recession. The hope would be that we'll have
something more tangible on the fiscal side sooner rather than
later."