* China mulls support for virus-struck airliners - BBG
* Dollar/yen firms past 110, small boost to Aussie and kiwi
* Euro hovers just above 3-year low hit overnight
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Feb 19 (Reuters) - The safe-haven yen eased
slightly on Wednesday amid signs China was looking to fend off
economic threats from the coronavirus, which supported investor
confidence as the outbreak's spread appeared to slow.
China posted the lowest daily rise in new infections since
Jan. 29, seen by some investors as an indication containment
efforts were working.
Meanwhile, a Bloomberg report, citing sources, that China is
considering cash injections or mergers to bail out airlines hit
by the virus also supported appetite for risk.
That pushed the yen to the weaker side of 110-per-dollar and
gave a little boost to Asia's export currencies.
CNY/ EMRG/FRX
China's yuan CNY= remained on the backfoot, however,
touching a two-week low after the central bank fixed a
softer-than-expected trading band, and as investors expected
further monetary easing. "It's a tug of war between wait-and-worry and being relieved
that the infection rate is slowing down," said Bank of Singapore
currency strategist Moh Siong Sim.
"The specific moves this morning are related to more policy
help from China...there's some relief that more help is on the
way and that is restoring some positivity to the market."
The new coronavirus has caused 2,004 deaths in China and
infected more than 74,000 people. Measures to contain it have paralysed the economy and
markets remain on edge as the extent of damage to regional
commerce and global supply chains becomes clearer. MKTS/GLOB
The yield curve between U.S. three-month bills and 10-year
notes inverted overnight, a bearish economic signal, while
firmness in exporter currencies is by no means a rebound. US/
The yen traded 0.2% weaker by the afternoon at 110.05 per
dollar JPY= . The euro EUR= hovered around $1.08, pausing a
slide that sent it to a three-year low overnight.
The New Zealand and Australian dollars both advanced by
about 0.1%. AUD/
The Antipodean currencies, heavily exposed to China, have
lost more than 4.5% against the dollar this year. Norway's
krone, sensitive to global growth via oil exports, has shed 6%
and it slumped to an 18-year low overnight NOK= .
Investors are looking to the minutes from the Federal
Reserve's January meeting, due to be released at 1900 GMT, for
insight on the Fed's thinking about virus risks.
European purchasing managers index numbers and part-month
Korean export figures, both due on Friday, are also going to be
closely watched for any hard signs of economic impact.
Hedge funds are using proxies from port activity to air
pollution to gauge the depth of the slowdown in the meantime.
"We assess the risks are firmly skewed towards the negative
effects of COVID-19 lasting longer," Nomura analysts wrote in a
note, using the World Health Organization's designation for the
illness caused by the coronavirus.
"Therefore, we maintain our cautious view through positions
in long USD/THB, long USD/CNH, long USD vs GBP, NZD and long
AUD/NZD."