FOREX-Euro falls after ECB holds fire, dollar jumps as spreads widen

* Euro falls after ECB decides not to cut rates
* Dollar jumps, analysts cite swap spread rise
* Safe havens like the yen and franc remain in demand
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Recasts after ECB announcement, updates prices)
By Saikat Chatterjee
LONDON, March 12 (Reuters) - The euro weakened on Thursday
after the European Central Bank announced more stimulus to fight
the coronavirus impact but did not lower interest rates, with
the single currency falling to the day's low as investors rushed
for dollars.
The ECB approved fresh stimulus measures on Thursday to help
the euro zone economy cope with the growing cost of the
coronavirus epidemic, but kept interest rates unchanged in a
move that may disappoint financial markets. The euro, down before the announcement, jumped briefly to
$1.13 but then skidded to as low as $1.1198, down 0.5% on the
day. EUR=EBS
Market watchers had expected an ECB cut to the main deposit
rate of 10 bps.
A press conference is due at 1330 GMT in
Frankfurt. The dollar rebounded sharply after the ECB announcement, and
was last up 0.4% against a basket of currencies at 96.613.
=USD
Analysts said the dollar had rallied as swap spreads on
major currencies blew out and investors scrambled for the U.S.
currency.
"It's all about dollar liquidity, the cross-curency basis
swap has blown out. I would assume it's banks/corporates driven.
We are moving to the next phase of the selloff," said Kenneth
Broux, a strategist at Societe Generale.
Safe-haven currencies remained in demand on Thursday with
the Japanese yen and the Swiss franc leading gains. The dollar
had earlier struggled after U.S. President Donald Trump banned
travel from Europe to stem the coronavirus.
With the latest ban posing a fresh disruption to the global
economy, traders were also disappointed by the lack of broad
measures in Trump's plan to fight the pathogen, prompting
traders to bet on further aggressive easing by the Federal
Reserve.
Money markets are now expecting another 100 bps of easing
from the Fed by next week taking the benchmark policy interest
rates to zero after a hefty half point rate cut last week.
"The market was looking for more," said Moh Siong Sim,
currency strategist at the Bank of Singapore.
The Japanese currency JPY=EBS climbed 0.5% versus the
greenback to 103.98 yen, below a four-year high of 101.28 hit on
Monday. The Swiss franc CHF=EBS climbed but then fell and was
last down 0.2% at $0.94.
Risk aversion was the dominant theme in currency markets on
Thursday as Asian and European stock markets were a sea of red,
forcing traders to stampede out of currencies heavily geared to
the global economy such as the Norwegian crown NOK= and the
Australian dollar. AUD=
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".