TOKYO (Reuters) – The euro was on the back foot on Monday, as concerns mounted about weakening economic growth in Europe at a time financial markets and policymakers fret about a new threat to the global economy from a fast spreading coronavirus in China.

The euro, which hit a 33-month low of $1.0817 on Friday, fetched $1.08385 EUR= in afternoon Asian trade on Monday, flat so far on the day but down 2.3% since the start of month – the worst performance among G10 currencies.

“Coronavirus is increasingly looking like a long-term issue and thus, at least for currency markets, it will be playing second fiddle,” said Kyosuke Suzuki, manager of currencies at Societe Generale.

“In contrast, sentiment on the euro is becoming clearer, with weak economic fundamentals helping to push it down.”

The German economy stagnated in the fourth quarter due to weaker private consumption and state spending, data showed on Friday, renewing fears of a recession at a time Chancellor Angela Merkel’s conservatives are preoccupied with a search for a new leader.

Europe’s biggest economy posted zero growth from the previous quarter while separate data showed euro zone gross domestic product grew 0.1% quarter-on-quarter in the fourth quarter, in line with forecasts but the weakest since 2014.

There was even a chatter about the possibility of a rate cut by the European Central Bank, with euro zone money market instruments pricing in a small chance of rate cut in coming months, though bond yields were so far little moved.

“I think the currency market is going a bit too far in talking about easing possibilities,” said Hideki Kishida, senior economist at Nomura Securities.

“But people in the forex market are probably thinking that if data for the period before the coronavirus was so weak, it will get worse, and if China catches a cold, so will Germany.”

Japan’s economy was also under increasing strain, with GDP figures released on Monday coming in far below economist’ forecasts, hitting Tokyo shares.

The world’s third-largest economy shrank 1.6% in the three months to December, the largest drop in six years, hit by sales tax hike.

Reaction in the currency market was muted as the safe-haven yen tends to be supported on bad news. It stood at 109.80 yen per dollar JPY=, little moved in a tight range for more than a week.

“I am getting sick of looking at those .80 on my screen,” said a trader at a U.S. bank, referring to the last two digits of the dollar/yen rate.

Most market players expect growth in the United States to remain stronger among the developed world, although data published on Friday provided a mixed picture.

U.S. core retail sales was flat last month, lagging expectations of 0.3% growth while its rise in December was revised down to 0.2% from a previously reported 0.5%.

Industrial production also shrank more than expected by 0.3%.

Still, economists have blamed one-off factors such as warm weather and output suspensions stemming from troubles at Boeing (BA.N) for the downbeat numbers.

The dollar index =USD stood at 99.131, near Friday’s 4 1/2-month high of 99.241.

The Australian dollar edged up as investors assessed the latest reading on coronavirus cases in China’s Hubei Province, the epicenter of the outbreak.

The province reported 1,933 new cases, up slightly from the previous day after two days of falls, but the number of new deaths dropped to 100 from 139. Nationwide, the total infections topped 70,000.

The Australian dollar ticked up 0.15% to $0.67155 AUD=D4. The currency, which is used as a proxy for risk on Chinese assets because of Australia’s high trade exposure to the Asian giant, has partly been supported by expectations of stimulus from Beijing.

The onshore yuan CNY=CFXS was also up, trading 0.17% higher at 6.9760 per dollar by midday.

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