February 5, 2020 / 8:18 PM / 17 days ago

FOREX-Dollar shines on robust U.S. private payrolls, news of virus treatment

    * Talk of possible virus treatment sparks risk asset rally
    * Death toll from coronavirus rises to 490
    * U.S. private payrolls rise more than expected in January
    * U.S. services sector activity picks up in January
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 5 (Reuters) - The dollar gained against the safe-haven Japanese yen and Swiss franc on
Wednesday, as risk appetite rose on reports of a possible treatment for the new coronavirus out of China
that has caused major disruptions among global businesses.
    The U.S. currency also benefited from a strong private-sector payrolls report for January, suggesting
the world's largest economy was on a stable growth path.
    The focus, though, remained on the coronavirus, with the yen and Swiss franc falling after news
reports said a Chinese university had found a drug to treat infected people, and researchers in Britain
had made a "significant breakthrough" in finding a vaccine.
    Traders used the headlines to load up on risky assets.
    "There is some optimism about having potentially a way to treat the symptoms from having the
coronavirus," said Erik Nelson, currency strategist, at Wells Fargo Securities in New York.
    The latest coronavirus has so far claimed 490 lives, most in and around the locked-down central city
of Wuhan, where it emerged late last year. There have been two deaths in the Philippines and Hong Kong,
both following visits to Wuhan.
    Investors overall were heartened as China's central bank injected substantial liquidity into the
financial system to cushion the economic fallout from the virus. 
    "The response we're seeing from Chinese authorities is not surprising," said Erik Bregar, head of FX
strategy, at Exchange Bank of Canada in Toronto. "They're doing everything they can to shore up investor
confidence and frankly we expect more of this kind of reporting." 
    Risk sentiment also improved after U.S. private-sector payrolls increased by 291,000 in January, the
ADP National Employment Report showed, far above expectations of an increase of 156,000 jobs. January's
job gains were the largest since May 2015. 
    In addition, U.S. services sector activity picked up last month, with industries reporting increases
in new orders. The Institute for Supply Management's non-manufacturing index rose to 55.5 last month, the
highest since August.
    "The U.S. has shown quite a bit of resilience for a long time and to the extent that the global
economy is going to turn the corner, that's good for the U.S.," said Wells Fargo's Nelson.
    In afternoon trading, the dollar rose 0.3% against the yen to 109.71 yen, after earlier rising
to a two-week high of 109.84 yen. It also rose 0.5% versus the Swiss franc to 0.9738 franc.
    The Australian dollar, a barometer of risk appetite toward China given Australia's close economic ties
with Beijing, was also well-bid, up 0.2% versus the dollar at US$0.6754.
    The Chinese currency in the offshore market also rebounded 0.2% against the dollar, which
fell to 6.9751 yuan.
    The euro, meanwhile, fell 0.4% to $1.0995, pushing the dollar index up 0.4% at 98.308,
mostly related to U.S. private sector job gains.
    Currency bid prices at 2:59 PM (1959 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.0995        $1.1042     -0.43%         -1.92%      +1.1047     +1.0994
 Dollar/Yen       JPY=        109.8100       109.5100    +0.27%         +0.88%      +109.8400   +109.3100
 Euro/Yen         EURJPY=     120.75         120.96      -0.17%         -0.98%      +121.1400   +120.6600
 Dollar/Swiss     CHF=        0.9737         0.9690      +0.49%         +0.61%      +0.9747     +0.9679
 Sterling/Dollar  GBP=        1.2986         1.3029      -0.33%         -2.04%      +1.3069     +1.2958
 Dollar/Canadian  CAD=        1.3287         1.3272      +0.11%         +2.32%      +1.3302     +1.3262
 Australian/Doll  AUD=        0.6744         0.6737      +0.10%         -3.95%      +0.6774     +0.6725
 Euro/Swiss       EURCHF=     1.0708         1.0702      +0.06%         -1.33%      +1.0728     +1.0691
 Euro/Sterling    EURGBP=     0.8464         0.8474      -0.12%         +0.12%      +0.8490     +0.8435
 NZ               NZD=        0.6475         0.6488      -0.20%         -3.87%      +0.6502     +0.6470
 Dollar/Norway    NOK=        9.2074         9.2095      -0.02%         +4.89%      +9.2493     +9.1769
 Euro/Norway      EURNOK=     10.1240        10.1701     -0.45%         +2.91%      +10.2147    +10.1120
 Dollar/Sweden    SEK=        9.5871         9.5883      -0.44%         +2.56%      +9.6011     +9.5516
 Euro/Sweden      EURSEK=     10.5433        10.5902     -0.44%         +0.71%      +10.5985    +10.5280
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Jonathan Oatis and Richard Chang)
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