Broadly strong dollar grinds yen to 10-month low

South Korean won, Chinese yuan and Japanese yen notes are seen on US 100 dollar notes in this picture illustration December 15, 2015. — Reuters pic
South Korean won, Chinese yuan and Japanese yen notes are seen on US 100 dollar notes in this picture illustration December 15, 2015. — Reuters pic

NEW YORK, Feb 20 — The yen fell past 112 to a 10-month low against a broadly stronger US dollar today, extending recent losses for the Japanese currency as investors fretted about dire economic news out of the country.

Against the yen, the dollar rose 0.71 per cent to 112.14, its highest since April. The yen, which benefits during geopolitical or financial stress as Japan is the world’s biggest creditor nation, has slipped about 2 per cent over the last two sessions, its biggest two-day drop since September 2017.

“The JPY has slipped sharply this week and lost more ground overnight as its safe-haven appeal vanishes amid local virus worries,” Shaun Osborne, chief FX strategist at Scotiabank in Toronto said in a note.

China reported a drop in new coronavirus infections today, but scientists warned the pathogen may spread more easily than previously believed as two elderly passengers from a ship quarantined in Tokyo became the latest to die.

A run of dismal economic news out of Japan has stirred talk the country is already in recession.

“The ties to China, exposure to the coronavirus, compounded by Japan’s own domestic challenges is bolstering fears that the world’s third-largest economy is likely contracting for the second consecutive quarter,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.

Against a basket of currencies, the dollar was 0.18 per cent higher at 99.744, just shy of the 100 mark, a level not touched in nearly three years.

Financial markets were little moved by US unemployment data. There was encouraging news on the struggling manufacturing sector, with other data showing factory activity in the mid-Atlantic region accelerated to a three-year high in February, likely as tensions diminished in the 19-month trade war between the United States and China.

The US economy is showing no signs of losing steam, US Federal Reserve Vice Chair Richard Clarida said in an upbeat assessment of the outlook that showed little alarm about the coronavirus outbreak.

The Australian dollar slid to a near 11-year trough as data showing a surprisingly sharp rise in unemployment added to the case for further cuts in interest rates at a time when markets were already skittish over the coronavirus. The Aussie was 0.76 per cent lower against the greenback.

Sterling plunged to a three-month low against the dollar as the greenback’s broad-based strength swept away recent pound gains which were driven by the appointment of a new, potentially high-spending British finance minister. — Reuters

Related Articles