* Yen at 2-week high, yuan at 2-week low on virus fears
* 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
firmed and the Chinese yuan weakened on Thursday, as traders
kept a wary eye on the spread of a virus in China, while the
battered Australian dollar jumped after a surprise drop in
unemployment.
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 currency moves, while modest, extend a push for safety
that began on Tuesday and had partially reversed on Wednesday.
MKTS/GLOB
"Yesterday we thought it was one sell-off and done...today
it's a bit of a slap back to reality," said Chris Weston, Head
of Research at Melbourne brokerage Pepperstone.
"The fact that USD/CNH is up is because people are seeing
signs that there has to be some sort of stimulus on the back of
this. People are seeing this impact economics."
The dollar hit its strongest in two weeks against the
falling yuan, which traded at 6.9254 midsession CNY= .
The Japanese yen JPY= , seen as a haven by virtue of
Japan's position as the world's largest creditor, rose 0.2% to a
two-week high of 109.56 per dollar as investors sought safety.
Yields on benchmark 10-year U.S. Treasuries also edged lower
to a two-week trough US10YT=RR as bond prices rose.
The U.S. dollar was otherwise firm, rising a bit against the
euro EUR= and kiwi NZD=D3 and edging up to 97.552 against a
basket of currencies .DXY .
The World Health Organization will decide later on Thursday
whether to declare the situation a global health emergency.
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 in 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.
Elsewhere, the Australian dollar AUD=D3 , which has shed
more than a cent this year as the domestic economy stalls,
jumped 0.5% to $0.6879 after jobs data showed a surprising drop
in unemployment to a nine-month low. It settled back to $0.6866, but the strong number - the
28,900 jobs created in December was nearly double what analysts
had expected - prompted an unwinding of bets that the central
bank will cut rates next month.
Analysts at ANZ, Commonwealth Bank and Citi all dropped
predictions for a reduction, and futures pricing showed the
probability of a cut in February fall from an even chance to
about one-in-four. 0#YIB
The British pound GBP= sat a fraction below a three-week
high at $1.3125, after an overnight rebound in manufacturing
sentiment prompted investors to trim rate cut bets. BOEWATCH
Factories' optimism about the outlook rose to the highest
since August 2014, according to a quarterly survey from the
Confederation of British Industry. The focus for the pound now
turns to broader business surveys due on Friday.
(Editing by Michael Perry and Jacqueline Wong)