FOREX-Riskier currencies steady as investors assess China virus fallout

* Yuan steadies after slide to month low on Monday
* Yen and Swiss franc slightly softer
* Inflation data supports Aussie
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano and Tom Westbrook
TOKYO/SINGAPORE, Jan 29 (Reuters) - Riskier currencies
steadied on Wednesday and demand for safe-havens ebbed, as
investors waited for more news on the likely economic damage
from a virus outbreak spreading from China.
The offshore yuan - heavily sold in recent days - was
marginally stronger at 6.9551 per dollar CNH= , off Monday's
6.9900 to the dollar, which was its weakest in almost a month.
Firmer-than-expected inflation figures supported the
Australian dollar from Tuesday's three-and-a-half month low to
$0.6773, a gain of 0.15% for the day AUD=D3 . AUD/
The Japanese yen was a touch weaker. Though with moves
slight across the board, it is clear traders remain on edge.
"The way risk is trading, people are saying that perhaps we
reached peak worries, peak fear," said Chris Weston, Head of
Research at Melbourne brokerage Pepperstone.
"But it's got an uncertain feel to it...it's difficult to
sell the yen or sell Swiss franc in an environment where the
newsflow is still getting progressively worse, and we're not
really fully able to price risk."
The newly-identified virus has created alarm because it is
spreading quickly and there is little known about it. The death
toll rose sharply to 132 on Wednesday with nearly 1,500 new
cases, for a total of nearly 6,000 cases.
The yen was a touch weaker at 109.2 yen per dollar JPY= ,
while the Swiss franc CHF= edged 0.1% softer to a two-week low
of 0.9744 francs per dollar.
Mainland Chinese markets are shut for Lunar New Year this
week, with onshore currency and bond trading closed. Hong Kong's
equity markets tumbled in their first session since the break.
.HK
Elsewhere, the euro stood at $1.1013 EUR= , having hit a
two-month low of $1.0998 on Tuesday, after a strong U.S.
consumer sentiment reading buoyed the greenback. Sterling was steady at $1.3018 GBP=D4 , having also dropped
overnight as the dollar rose to a two-month high against a
basket of currencies .DXY .
In Asian hours, the dollar held below that peak at 98.027.
The U.S. Federal Reserve meets later on Wednesday and is
expected to keep rates on hold with a wary eye to the economy.
FEDWATCH
But some think a mere mention of risks from the coronavirus
may spark speculation the Fed could dole out more stimulus in
future, if the U.S. economy is hit by fallout from the outbreak.
"It is not necessarily the virus per se that is the problem
for the world's economy," said Jeffrey Halley, senior market
analyst for Asia Pacific at broker OANDA.
"It is the self-feeding negative feedback loop on economic
activity, and thus growth, it creates...a worst-case scenario,
dragging over the next few months, could even knock the Federal
Reserve off autopilot trajectory."