The safe-haven yen was last up 0.73% at 110.74 per dollar, having strengthened to 110.34 earlier in the day.
The dollar index <=USD>, which weighs the greenback against a basket of six peers, can also function as a safe-haven trade. But it was in negative territory for the day, likely because of a significant move lower in U.S. equities. It was last down 0.095% at 99.33 per dollar.
With coronavirus cases rising in Italy and several Middle Eastern countries dealing with their first infections, fears of a global pandemic sent markets into a tailspin, even as China eased curbs with no new cases reported in Beijing and other cities.
U.S. stocks fell sharply, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq all off by nearly 3%. Wall Street's fear gauge, the CBOE Volatility Index, jumped to a six-month high. [.N] European equities markets suffered their biggest slump since mid-2016, gold soared to a seven-year high and oil tumbled nearly 5%.
"Ultimately this is all a risk-off trade," said Marvin Loh, senior global markets strategist at State Street Global Markets.
"When you look at the yen, when you look at the Swissie, when you look at rates, it is risk-off. It's probably reflective, to a certain degree, of the market being a little too sanguine up until now ... so there's an adjustment process around it."
Still, the yen traded well within last week's range, and currency market moves were muted compared with those in U.S. stocks and Treasuries. Some analysts said investors might be discounting the yen's traditional safe-haven value because of Japan's virus exposure.
"In the scheme of things however, given risk-off conditions, and heightened coronavirus concerns, USD-JPY has held up relatively well," wrote analysts at Action Economics. "There was talk last week of early portfolio flows into the dollar ahead of Japan's fiscal year end on March 31, with pension funds rumored to have been big buyers. These flows may continue, and despite the current risk-averse conditions, may limit USD-JPY downside for now."
U.S. economic data last week came in below expectations. Money markets are now pricing in a Federal Reserve interest rate cut of 25 basis points in June.
By Kate Duguid