FOREX-Dollar weak as Trump travel ban adds headwinds to global economy

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, March 12 (Reuters) - Safe-haven currencies were in demand on Thursday with the Japanese yen and the Swiss franc leading gains against the struggling dollar after U.S. President Donald Trump banned travel from Europe to stem the coronavirus.

With the latest ban posing a fresh disruption to the global economy, traders were also disappointed by the lack of broad measures in Trump's plan to fight the pathogen, prompting traders to bet on further aggressive easing by the Federal Reserve.

Money markets are now expecting another 100 bps of easing from the Fed by next week taking the benchmark policy interest rates to zero after a hefty half point rate cut last week.

"The market was looking for more," said Moh Siong Sim, currency strategist at the Bank of Singapore.

In early London trading, the Japanese currency climbed 0.8% versus the greenback to 103.65 yen just below a four-year high of 101.28 hit on Monday. The Swiss franc climbed 0.2% $0.9365 versus the greenback.

Risk aversion was the dominant theme in currency markets on Thursday as Asian and European stock markets were a sea of red, forcing traders to stampede out of currencies heavily geared to the global economy such as the Norwegian crown and the Australian dollar.

Trump announced on Wednesday a ban on travellers from 26 European countries entering the United States for a month.

He unveiled economic steps to counter the virus but his address from the Oval Office was light on medical measures beyond assurances that "the virus has no chance against us".

Market watchers are now focusing on the European Central Bank where traders expect a cut to the main deposit rate by 10 bps.

A press conference is due at 1230 GMT in Frankfurt, after the monetary policy meeting. But it is no certainty since rates are already at a record-low -0.5% and further cuts could hurt bank margins and so squeeze lending.

Meanwhile, the euro steadied around $1.12585, not far away from a January 2019 high of near $1.15 hit on Monday. (Reporting by Saikat Chatterjee; Additional reporting by Tom Westbrook in Singapore; Editing by Peter Graff)