February 5, 2020 / 3:57 PM / 16 days ago

FOREX-Dollar gains on strong U.S. private payrolls, report 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

 (Recasts, adds new comment, U.S. data, FX table, updates prices, changes byline, dateline; previous
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 5 (Reuters) - The dollar gained against the safe-haven 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
gripped the world and caused major disruptions among global businesses.
    The U.S. currency also benefited from a private-sector payrolls report for January that surpassed
market expectations, suggesting the world's largest economy was on a stable growth path and interest rate
cuts were off the table for now.
    The focus, though, remained on the coronavirus, which has claimed 490 lives, most in and around the
locked-down central city of Wuhan, where the new virus emerged late last year.
    There have been two deaths outside mainland China: in the Philippines and Hong Kong, both following
visits to Wuhan.
    But the yen and Swiss franc fell after media reported a Chinese university had found a drug to treat
people with the virus, while researchers in Britain had made a "significant breakthrough" in finding a
    While the Chinese report was a day old and the British report indicated the research trials were in
early stages, traders used the headlines to load up on risky assets.
    "The market is starting to brush off the coronavirus," said Erik Nelson, currency strategist, at Wells
Fargo Securities in New York. "What's driving this are some of the headlines on possible vaccines. So
there is some optimism about having potentially a way to treat the symptoms from having the coronavirus."
    Risk sentiment also improved after U.S. private-sector payrolls increased by 291,000 in January,
according to the ADP National Employment Report, 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 activity index rose to 55.5 last
month, the highest level 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 late morning trading, the dollar rose 0.2% against the yen to 109.71 yen, after earlier
rising to a two-week high of 109.84 yen.
    It also rose 0.4% versus the Swiss franc to 0.9727 franc.
    The euro, meanwhile, fell 0.4% to $1.1003, pushing the dollar index up 0.3% at 98.264.
    The Australian dollar, a barometer of risk appetite towards China given its 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 0.3% against the dollar, which
fell to 6.973 yuan.
    Currency bid prices at 10:42AM (1542 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1001        $1.1042     -0.37%         -1.86%      +1.1047     +1.0998
 Dollar/Yen       JPY=        109.7000       109.5100    +0.17%         +0.77%      +109.8400   +109.3100
 Euro/Yen         EURJPY=     120.70         120.96      -0.21%         -1.03%      +121.1400   +120.6600
 Dollar/Swiss     CHF=        0.9726         0.9690      +0.37%         +0.50%      +0.9747     +0.9679
 Sterling/Dollar  GBP=        1.2985         1.3029      -0.34%         -2.07%      +1.3069     +1.2958
 Dollar/Canadian  CAD=        1.3292         1.3272      +0.15%         +2.36%      +1.3302     +1.3262
 Australian/Doll  AUD=        0.6746         0.6737      +0.13%         -3.92%      +0.6774     +0.6725
 Euro/Swiss       EURCHF=     1.0700         1.0702      -0.02%         -1.40%      +1.0728     +1.0691
 Euro/Sterling    EURGBP=     0.8469         0.8474      -0.06%         +0.18%      +0.8490     +0.8435
 NZ               NZD=        0.6476         0.6488      -0.18%         -3.86%      +0.6502     +0.6475
 Dollar/Norway    NOK=        9.2152         9.2095      +0.06%         +4.97%      +9.2493     +9.1769
 Euro/Norway      EURNOK=     10.1382        10.1701     -0.31%         +3.05%      +10.2147    +10.1120
 Dollar/Sweden    SEK=        9.5759         9.5883      -0.51%         +2.44%      +9.6011     +9.5516
 Euro/Sweden      EURSEK=     10.5365        10.5902     -0.51%         +0.64%      +10.5985    +10.5280
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by
Jonathan Oatis)
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