FOREX-Euro traders wait for ECB meeting, yuan drops on virus fears

* Yuan has lost more than 1% since Monday as virus spreads
* Yen at two-week highs, but moves contained
* ECB rate decision due at 1245 GMT, press event at 1330 GMT
* Aussie jumps after strong employment data
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details, latest prices)
LONDON, Jan 23 (Reuters) - The euro remained stuck in its
recent trading range on Thursday before the European Central
Bank's meeting, while China's yuan dropped on fears about the
spread of a virus.
Euro/dollar EUR=EBS traded little changed at $1.1094. So
did the dollar against a basket of currencies .DXY .
The ECB introduced a stimulus program in September and data
since then have suggested some improvement in the euro zone's
economy, so analysts doubt ECB boss Christine Lagarde will
announce much on Thursday.
Investors will focus on her answers to questions about the
ECB's strategic review, which could see changes to its inflation
target.
"The ECB meeting will, in our view, have limited
implications for EUR/USD. The two key points in the Bank's
message should be, in our view, that data suggests a pick-up in
inflation, and the manufacturing cycle has bottomed out," ING
analysts said.
The ECB rate decision is due at 1245 GMT. Its press
conference starts at 1330 GMT.
Euro/dollar volatility has collapsed in the absence of major
monetary policy shifts. Expectations for price swings across FX
markets is also at or near record lows .DBCVIX .
Elsewhere, the Japanese yen strengthened and China's yuan
fell to a two-week low on Thursday as investors grew more
anxious about the spread of a virus in China.
Deaths from the flu-like coronavirus stand at 17 and almost
600 people are infected. China has locked down Wuhan, a city of
11 million people, where the outbreak was believed to have
originated. The moves up in the safe-haven yen and down in the yuan were
measured, suggesting investors were not yet panicking about the
virus.
The yen rallied 0.2% to 109.59 JPY=EBS after earlier
reaching 109.49 yen per dollar, its strongest since Jan. 13.
The dollar gained 0.3% versus the offshore Chinese yuan
CNH=EBS to 6.9351 yuan. The Chinese currency has now lost more
than 1% of its value since it touched six-month highs on Monday.
The onshore yuan CNY=CFXS is on course for its worst week
since August. Hao Zhou, an economist at Commerzbank, said the worry was
that the virus would hurt China's domestic demand.
"To cope with this risk, monetary policy could illustrate
further easing bias. For the FX market, risk-off mode is likely
to dominate for the time being," he said.
The Australian dollar gained as much as 0.5% to 0.6879
AUD=D3 after data showed unemployment declined to a nine-month
low.
Norway's crown recovered some of its earlier losses to trade
at 9.964 crowns per euro EURNOK=D3 after the Norges Bank left
interest rates on hold and maintained its outlook for the
economy. Sterling consolidated around $1.3130 GBP=D3 after gaining
Wednesday on dwindling expectations the Bank of England would
cut interest rates next week.
The euro briefly fell to a near three-year low against the
Swiss franc of 1.0729 EURCHF=EBS before recovering to 1.0743.
The Canadian dollar dropped again, reaching a one-month low
of 1.3171 against the U.S. dollar CAD=D3 , after the Bank of
Canada on Wednesday signalled a future rate cut if a recent
slowdown in domestic growth persists.