FOREX-Euro near 7-week low after ECB; virus fears support yen

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, Jan 24 (Reuters) - The euro hovered near a seven-week
low against the dollar on Friday after the European Central Bank
was seen as more dovish than expected, while anxiety over
China's coronavirus outbreak propped up the safe-haven yen.
The euro stood at $1.1055 EUR= , touching a seven-week low
of $1.1036 hit in U.S. trade on Thursday after the ECB held
interest rates steady and launched a broad review of its policy.
ECB President Christine Lagarde on Thursday sought to
redefine the ECB's main goal and how to achieve it, as years of
the central bank's experiment with negative interest rates and
quantitative easing have failed to deliver targetted inflation
levels.
Lagarde told a news conference that risks to growth in the
euro zone remained tilted to the downside and traders took her
overall tone as dovish.
Purchasing Managers' Index (PMI) data from Germany and the
euro zone due later on Friday is the next focus for the
currency.
The common currency was also undermined by the coronavirus
threat in China because some countries in the currency bloc,
notably Germany, have big trade exposures to the Asian economic
giant.
Concerns about the new disease bolstered the yen, which
traded at 109.55 yen to the dollar JPY= , having risen to a
two-week high of 109.26 on Thursday.
The World Health Organisation (WHO) said on Thursday it was
"a bit too early" to declare the new coronavirus a global health
emergency, providing financial markets with some relief.

Yet many investors were anxious as China took the
unprecedented measure of closing transportation networks in
Wuhan, putting millions of people in lockdown. "The Lunar New Year holiday in China has just begun and they
say the virus could be latent for about a week. So at least for
the next couple of weeks it will be difficult to gauge how much
the new disease will have spread during the holiday," said
Shinichiro Kadota, senior FX strategist at Barclays.
"That suggests the yen is likely to have a strengthening
bias during this period," he added.
The Australian dollar fetched $0.68415 AUD=D4 , having
erased all of the gains made after a firm payrolls figure the
previous day, and was on track for a fourth consecutive week of
losses.
On top of worries about the damage from coronavirus, the
currency has been dogged by concerns over the fallout from
bushfires that have been ravaging the country for weeks.
Elsewhere, sterling traded at $1.3123 GBP=D4 , little
changed on the day but up 0.9% so far this week as solid UK
economic data prompted traders to wind back expectations of a
rate cut by the Bank of England at its policy meeting next week.
The country's PMI data, due at 9:30 a.m. local time
(0930GMT) on Friday, is now being closely watched for clues on
the BoE's move at its policy decision on Jan. 30.