FOREX-Yen gains, yuan and Aussie dlr slip as China virus fears return

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Rise in new cases comes after Hubei changes methodology
* Yen gains, yuan dips as virus anxiety return to haunt
markets
* Asian Stocks and Australian dollar also pullback

By Stanley White
TOKYO, Feb 13 (Reuters) - The yen rose from a three-week low
against the dollar on Thursday after China's Hubei province, the
epicentre of a coronavirus outbreak, reported a sharp jump in
the number of new cases in a jolt to markets and sparking a
flight for safe-haven assets.
The Chinese yuan slipped against the dollar as the latest
update on the spread of the virus provided a grim reminder to
investors that the epidemic remains a potent threat to the
global economic outlook. Hubei on Thursday reported 14,840 new cases as of Feb. 12,
up from 1,638 new cases on Tuesday, with the number of deaths in
the province rising a sharp 242 to 1,310.
Hubei's health commission said it started including cases
diagnosed with a new method. Uncertainty about the virus, which
emerged in Hubei's capital Wuhan late last year and has spread
to 24 other countries, has shaken up markets over the past
weeks.
"When you see numbers like this, you can't help but move to
risk-off trades, which means buy the yen and sell stocks," said
Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in
Tokyo.
"If the authorities can reasonably explain this, things
might calm down, but I expect risk aversion to continue."
The yen JPY=EBS rose 0.15% on Thursday to 109.94 yen,
pulling back from its weakest since Jan. 21.
In the onshore market, the yuan CNY=CFXS slipped 0.1% to
6.9792 per dollar, while offshore the Chinese currency CNH=D3
gave up 0.12% to 6.9813.
The Australian dollar AUD=D3 , widely used as a proxy for
risk on Chinese assets, fell 0.19% to $0.6728, while the New
Zealand dollar NZD=D3 dipped 0.25% to $0.6451.
Both Australian and New Zealand have extensive trade ties
with China, with trade in commodities, tourism and education
especially vulnerable to disruption from the virus.
The New Zealand dollar had enjoyed a lift the previous day
when the central bank dropped a reference to the chance of
future rate cuts in its policy review. Earlier on Thursday, an
assistant governor told Reuters the central bank has a "genuine
neutral bias" amid improving domestic demand, but is open to
reviewing that position if the economic hit from the coronavirus
epidemic worsened. The World Health Organization has likened the epidemic's
threat to terrorism, underscoring the anxiety in financial
markets about its impact across businesses and trade worldwide.
Chinese policymakers have implemented a raft of measures to
support the economy as fears grow the coronavirus outbreak could
have a damaging impact on growth in the Asian giant and
globally. Elsewhere in currencies, the dollar EUR=EBS traded at
$1.0872 per euro, close to its strongest level in more than two
years due to growing optimism about the health of the U.S.
economy.
Sentiment for the greenback has turned positive since data
last week showed the U.S. labour market is improving. In contrast, the euro wilted on Wednesday after data showed
euro zone manufacturing output plunged more than expected in
December, boding ill for fourth quarter euro zone gross domestic
product data due on Friday. The euro EURGBP=D3 changed hands at 83.92 pence on
Thursday in Asia, close to its lowest since Dec. 17.
The pound GBP=D3 was little changed at $1.2954.
Cable has managed to inch away from 2-1/2-month lows hit at
the start of the week due to encouraging economic data, but
investors remain anxious over British Prime Minister Boris
Johnson's hard line in trade talks with the European Union.