FOREX-Yen holds gains on virus woes, euro crumbles on weak growth outlook

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* China virus uncertainty weighs on markets
* Euro takes a hit before GDP data
* Sterling sees positives in cabinet reshuffle

By Stanley White
TOKYO, Feb 14 (Reuters) - The Japanese yen held onto gains
against the dollar on Friday as renewed worries about the
coronavirus outbreak supported demand for safe-haven currencies
and weighed on prices of riskier assets.
The Chinese yuan nursed losses in offshore trade as the
flu-like virus, which emerged late last year in China's Hubei
province, slammed the brakes on consumer spending and
manufacturing.
The euro languished at multi-year lows versus the dollar and
the Swiss franc as investors grow more pessimistic about the
outlook in the euro zone before the release of gross domestic
product data later on Friday.
In contrast, the pound rode a wave of optimism into Asia on
Friday due to hopes that a British cabinet reshuffle will lead
to more expansionary fiscal policy to support growth.
Officials in Hubei stunned financial markets on Thursday by
announcing a sharp increase in new infections and deaths from
the coronavirus, reflecting the adoption of a new method to
diagnose the illness. Uncertainty about the scale of epidemic is likely to
discourage investors from taking on excessive risk until there
is sufficient evidence that its spread has slowed.
"There is a return of risk aversion, so yen and other
safe-haven assets have risen, but reaction so far has been
temporary and limited," said Masafumi Yamamoto, chief currency
strategist at Mizuho Securities in Tokyo.
"The change of reporting standards in china is a concern.
There is a fear that China is still hiding something."
The yen JPY=EBS traded a tad higher at 109.79 per dollar
on Friday in Asia, on course for its second day of gains.
In the offshore market, the yuan CNH=D3 was quoted at
6.9910, following a 0.2% decline on Thursday.
Hubei officials on Friday reported 4,823 new cases and 116
new deaths as of Feb. 13, but investors were still reeling after
Hubei reported 14,840 new cases and a record daily increase in
deaths on Thursday, using new diagnostic methods to reclassify a
backlog of cases. China's economy will grow at its slowest rate since the
financial crisis in the current quarter, according to a Reuters
poll of economists who said the downturn will be short-lived if
the outbreak is contained. The coronavirus was first detected in the Chinese city of
Wuhan, a nerve centre in the global supply chain. It has so far
claimed more than 1,300 lives in China and spread to 24 other
countries.
The euro EUR=EBS fell 0.1% to $1.0827, the lowest since
April 2017, as investors braced for the release of GDP data from
Germany and the euro zone later on Friday.
The single currency EURCHF=EBS was quoted at 1.0614 Swiss
francs, close to the lowest since August 2015. The euro
EURGBP=D3 eased slightly to 83.06 pence, close to the weakest
since December.
Sentiment for the euro worsened after data earlier this weak
showing a plunge in euro zone manufacturing output reinforced
expectations that monetary policy will remain accommodative.
The pound GBP=D3 was little changed at $1.3046 following a
0.64% gain on Thursday due to expectations that British Prime
Minister Boris Johnson's appointment of a new finance minister
will lead to more fiscal spending to help Britain weather its
transition away from the European Union.