FOREX-Yen jumps and yuan sags on Chinese 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

LONDON, Jan 23 (Reuters) - 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, while
the euro was calm ahead of the European Central Bank meeting.
Elsewhere, Australia's dollar rose half a percent after a
surprise drop in the country's unemployment rate.
Deaths from the flu-like coronavirus stand at 17. Almost 600
people are infected and China has locked down Wuhan, a city of
11 million people, where the outbreak was believed to have
originated at an animal market. 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 0.3% to 109.57 JPY=EBS after earlier
reaching 109.50 yen per dollar, its strongest since Jan. 13.
The dollar gained 0.3% versus the offshore Chinese yuan
CNH=EBS to 6.9351 yuan, which has now lost more than 1% of its
value since its six-month highs touched on Monday.
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.
Euro/dollar EUR=EBS , trading at $1.1089, was little
changed before the ECB meeting, as was the dollar against 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 in a research note.
The ECB rate decision is due at 1245 GMT. Its press
conference starts at 1330 GMT.
The Australian dollar gained 0.5% to as high as 0.6879
AUD=D3 after data showed unemployment declined to a nine-month
low.
Sterling consolidated around $1.3040 GBP=D3 after gaining
Wednesday on dwindling expectations the Bank of England will cut
interest rates next week.
The euro fell to a three-year low against the Swiss franc of
1.0737 EURCHF=EBS before recovering to 1.073.
The franc has been strengthening since the U.S. Treasury
added Switzerland to a watchlist of currency manipulators, which
led some to bet the Swiss central bank will be more willing to
let the franc appreciate.
The Canadian dollar dropped again, reaching a one-month low
of 1.317 against the U.S. dollar CAD=D3 , after the Bank of
Canada on Wednesday signalled a future rate cut should a recent
slowdown in domestic growth persist.