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FOREX-Euro sinks against dollar as U.S. assets look more attractive
Published at 13/02/2020 at 19:37

* Euro lowest since May 2017 against dollar

* Rise in coronavirus cases boosts dollar, yen

* Central banks expected to hold rates low

(Updates prices)

By Karen Brettell

NEW YORK, Feb 13 (Reuters) - The euro dropped to more than two-year lows against the dollar on Thursday as concerns about a sharp rise in the number of new cases in the coronavirus outbreak in China led investors to seek out U.S. assets.

The United States is better placed to weather the economic impact of the virus than the eurozone.

The coronavirus death toll in China's Hubei province increased by a record 242 on Thursday to 1,310, with a sharp rise in confirmed cases after the adoption of new methodology for diagnosis, health officials said.

"Europe, and Germany in particular, have very strong trade linkages to Asian markets, and specifically with China," said Mazen Issa, senior FX strategist at TD Securities in New York. "Coming into the year, expectations were for a moderate growth rebound. While it did seem reasonable at the time, the disruptions are going to delay that narrative."

The euro dropped as low as $1.0835, the lowest since May 2017. It breached technical support at the October low of $1.0877 on Wednesday. That leaves the currency vulnerable to further losses, analysts said.

The single currency also fell against the safe haven Swiss franc to 1.0610 francs, its lowest level since August 2015.

The Japanese yen gained against the dollar to 109.78 yen.

The greenback has benefited against the euro from a popular carry trade, where investors borrow in low-yielding currencies such as the euro and invest in dollars or other higher-yielding currencies.

Expectations that central banks will hold rates low, and may provide more accommodation if the coronavirus harms the global economy, is supporting risk appetite and may reduce the likelihood of a sharp selloff in stocks.

"The perspective is that rates will remain low, and that is cushioning some of the downside on the equity side," Issa said.

Stocks overcame earlier weakness to hit record highs on Thursday. They have set a record closing high every day this week.

U.S. data on Thursday showed that U.S. underlying consumer prices picked up in January as households paid more for rents and clothing, supporting the Federal Reserve's contention that inflation would gradually rise toward its 2% target.

========================================================

Currency bid prices at 2:24PM (1924 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.0841 $1.0871 -0.28% -3.29% +1.0888 +1.0835

Dollar/Yen JPY= 109.7800 110.0800 -0.27% +0.85% +110.0900 +109.6300

Euro/Yen EURJPY= 119.04 119.69 -0.54% -2.39% +119.7200 +118.9000

Dollar/Swiss CHF= 0.9787 0.9781 +0.06% +1.11% +0.9795 +0.9761

Sterling/Dollar GBP= 1.3052 1.2960 +0.71% -1.56% +1.3069 +1.2945

Dollar/Canadian CAD= 1.3260 1.3249 +0.08% +2.11% +1.3270 +1.3240

Australian/Doll AUD= 0.6724 0.6737 -0.19% -4.23% +0.6744 +0.6708

ar

Euro/Swiss EURCHF= 1.0612 1.0636 -0.23% -2.20% +1.0639 +1.0610

Euro/Sterling EURGBP= 0.8305 0.8388 -0.99% -1.76% +0.8399 +0.8296

NZ NZD= 0.6443 0.6463 -0.31% -4.35% +0.6466 +0.6429

Dollar/Dollar

Dollar/Norway NOK= 9.2601 9.2236 +0.40% +5.49% +9.2766 +9.2263

Euro/Norway EURNOK= 10.0407 10.0304 +0.10% +2.05% +10.0949 +10.0230

Dollar/Sweden SEK= 9.6782 9.6302 +0.19% +3.54% +9.6880 +9.6282

Euro/Sweden EURSEK= 10.4933 10.4731 +0.19% +0.23% +10.5025 +10.4753

(Editing by Will Dunham)

((Karen.Brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net))