Dollar tramples yen and everything else in its path
LONDON, Feb 20: The dollar trampled everything in its path on Thursday after a steep and sudden slide in the Japanese yen called into question its safe haven status and others from the euro to the Australian dollar were all knocked over.
The dollar has surged almost 2per cent since Tuesday against the yen, reaching its highest in almost 10 months, and climbed to near three-year highs against the euro.
Its DXY index against the world's most traded currencies, which is up 3.6per cent, rose overnight to its highest since May 2017. It also gained to its best levels of the year against China's offshore yuan and MSCI's index of emerging- market currencies.
A host of reasons were cited for the move, among them the outperformance of US economic and earnings numbers and worries over the threat of recessions in Japan and the euro zone.
"I think this has really brought into focus the role the dollar is playing as a safe haven," said Rabobank senior currency strategist Jane Foley. Japan's proximity to China's coronavirus problems and recent poor economic data there had also turned markets off the yen, she said.
China had reported a drop in new virus cases and announced an interest rate cut to buttress its economy. But South Korea recorded an increase in new case, Japan reported two deaths, and researchers said the pathogen seemed to spread more easily than previously believed.
European stock markets opened little changed. London, Frankfurt and Paris markets were flat to 0.3per cent lower after the first hour of trading. [.EU]
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3per cent, led by drops on Hong Kong's Hang Seng and South Korea's KOSPI. Wall Street futures for the S&P 500 were lower.
The yen had been undermined by a run of weak data this week, but traders were unnerved when it blew past a support level at 110.30 per dollar. -Reuters