The yen was headed for its worst week in two-and-a-half years on Friday, as worries about the coronavirus' spread in South Korea, Japan and Beijing drove funds from Asia to the towering United States (US) dollar.

Two days of heavy selling, following weak domestic data and growing fears about the virus' economic fallout, has the yen at its lowest since last April and investors questioning its worth as a safe haven. It has lost 2 per cent on the dollar since Wednesday.

The virus has killed more than 2,200 people in mainland China and efforts to contain it have largely paralysed the world's second biggest economy. On Friday South Korean authorities confirmed 52 new coronavirus infections, Yonhap reported, bringing its total to 156 and raising further alarm about the epidemic.

Two infected passengers from a cruise ship quarantined near Tokyo have died, and two passengers evacuated from the liner to Australia have now tested positive.

“New cases in (South) Korea and in Japan, (have) obviously given some people a little bit of cold feet regarding Japan and the yen as a safe haven,” said David Bloom, global head of FX at HSBC.

“They're thinking: 'Maybe Swissy and gold are better'. So there is a little bit of scratching of heads, there's no doubt about it,” he said, adding he was not yet prepared to abandon the idea of the yen as a safety play.

It morning trade it stood at 112.09 per dollar, mirroring weakness other currencies in Asia.

The Korean won has lost about 2 per cent and broke past 1,200 to the dollar this week. The Australian dollar is parked by an 11-year low and, along with New Zealand's currency, has shed 1.5 per cent for the week.

Both are down more than 5 per cent for the year amid the exodus from export-exposed assets in favour of U.S. dollars.

Against a basket of currencies, the dollar is sitting pretty at a three-year peak.

China's tightly-managed yuan is sitting just a fraction firmer than a two-and-a-half month low of 7.0547 per dollar touched in offshore trade overnight.

Meanwhile factory activity in Japan suffered its steepest contraction in seven years this month, data showed on Friday.

Should European Purchasing Managers' Index data show similar softness, another round of dollar buying may be in the offing.

“The U.S. is simply less exposed to any slowdown in global trade, and in terms of currencies it's the obvious candidate in terms of relatively limited impact from coronavirus,” said Westpac FX analyst Sean Callow.

“If European business takes fright at coronavirus concern, that could be a fresh cause of dollar buying across the board.”

The euro sank to a three-year low this week and last traded at $1.0788. The pound is a fraction firmer than an almost three-month low touched overnight at $1.2884.

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