* Euro zone economy remains weak but green shoots emerging
-PMIs
* Pound drops as rate cut remains possible despite better
(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Jan 24 (Reuters) - The U.S. dollar slipped against
the safe-haven Japanese yen on Friday as investors fretted over
concerns that a spreading virus from China would curb travel and
hurt economic demand.
The U.S. Centers for Disease Control and Prevention (CDC) on
Friday confirmed a second U.S. case of the new coronavirus from
China in a Chicago woman, and said as many as 63 potential cases
were being investigated as the sometimes-deadly illness
continues to spread around the globe. The newly discovered virus has killed 26 people and infected
more than 800. Most of the cases and all of the deaths so far
have been in China, where officials have imposed severe
restrictions on travel and public gatherings. Against the yen, which tends to draw investors during times
of geopolitical or financial stress given Japan's status as the
world's largest creditor, the dollar was 0.22% lower at 109.24
"The dollar and yen rallied modestly in New York trade on
Friday, with safe-haven buying the main driver into the
weekend," Ronald Simpson, managing director, global currency
analysis at Action Economics, said in a note.
"Nerves were ramped up some as the coronavirus outbreak
appeared to have worsened," Simpson said.
The dollar's appeal as a safe haven helped boost it near an
eight-week high against the euro on Friday. The move was aided
by lukewarm European PMI data that added to the broader market
conviction that European central bank policymakers will maintain
a loose monetary policy for the near future.
Euro zone business activity remained lackluster with the IHS
Markit's Euro Zone Composite Flash Purchasing Managers' Index
(PMI), seen as a good gauge of economic health, holding at 50.9
in January but missing the median prediction in a Reuters poll
for 51.2. That followed an earlier PMI from Germany, Europe's largest
economy, which showed the private sector gained momentum.
The euro was 0.23% lower against the greenback at $1.1027.
The survey data comes a day after the European Central Bank
did not make any policy change, standing by its pledge to keep
buying bonds and, if needed, cut interest rates until euro zone
inflation headed back to its goal.
Sterling retreated on Friday, after initially strengthening,
as some investors still expected an interest rate cut next week
even though business surveys pointed to a post-election bounce
in Britain's economy. The pound was 0.33% lower against the
greenback. GBP=
The Canadian dollar fell about 0.13% against its U.S.
counterpart as the coronavirus outbreak weighed on oil prices.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>