* Investors head for safety as China virus spreads
* Japanese yen rises to three-week high
* Aussie jumps as unemployment unexpectedly drops
* Pound at three-week peak as rate cut bets subside
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Jan 23 (Reuters) - The safe-haven Japanese yen
was firm and the Chinese yuan fragile on Thursday as traders
kept a wary eye on the spread of a virus in China, while the
ailing Australian dollar jumped after a surprise drop in
unemployment.
Deaths from the flu-like coronavirus, rose to 17 on
Wednesday. A total of 571 cases have now been confirmed and
Chinese state media reported overnight that transport to and
from the city of Wuhan in central China, where the outbreak
originated, is to be shut from 0200 GMT. The World Health Organisation will decide later on Thursday
whether to declare the situation a global health emergency.
"We'll be taking our leads from China and sentiment on the
ground," said Chris Weston, Head of Research at Melbourne
brokerage Pepperstone.
"USD/CNH remains a solid guide, and I see risks if we see
the cross push into 6.9150 ... with a belief that the Chinese
authorities will stimulate should economics be threatened."
The yuan held around 6.9110 per dollar in morning offshore
trade CNH= , not far above a two-week low hit on Wednesday.
The Japanese yen JPY= , seen as a haven by virtue of
Japan's position as the world's largest creditor, rose 0.1% to a
two week high of 109.65 per dollar as investors sought safety.
The U.S. dollar was otherwise steady, holding at about
$1.1093 per euro EUR= and at 97.527 against a basket of
currencies .DXY .
A major concern is that the virus could spread quickly as
millions of people travel across China, and the world, to
celebrate the Lunar New Year at their hometowns.
"China's efforts to be transparent is a reprieve for
markets, but our suspicion is that cautiousness is likely to
remain a near-term theme nonetheless," said Rodrigo Catril,
senior FX strategist at National Australia Bank in Sydney.
"For now it remains to be seen if China has managed to
contained the outbreak, particularly given the upcoming
holidays."
Elsewhere the Australian dollar AUD=D3 , which has shed
more than a cent this year as the domestic economy stalls, rose
0.5% to $0.6877 after jobs data showed an unexpected drop in
unemployment.
The figures showed 28,900 jobs created in December, nearly
double market expectations, prompting a rapid unwinding of bets
that the central bank will cut rates next month.
Futures pricing shifted quickly from an even probability of
a rate cut to only about a 1/4 chance. 0#YIB
The British pound GBP= sat a fraction below a three-week
high at $1.3147, after an overnight rebound in manufacturing
sentiment prompted investors to trim rate cut bets. BOEWATCH
Factories' optimism about the outlook rose to its highest
since August 2014, according to a quarterly survey from the
Confederation of British Industry. The focus now turns to
broader business surveys due on Friday.