Broadly strong dollar drives yen to 10-month low

NEW YORK (Reuters) – The yen fell above 112 to a 10-month low against a broadly stronger US dollar on Thursday, prolonging recent losses for the Japanese currency as investors worry about bad economic news outside the country made.

FILE PHOTO: A Japan Yen Note can be seen in this illustration photo taken on June 1st, 2017. REUTERS / Thomas White / Illustration

The dollar rose 0.62% against the yen to 112.04 yen, the highest since April. The yen, which is the world's largest creditor nation in terms of geopolitical or financial pressures as Japan, has fallen about 2% in the last two sessions, the biggest two-day decline since September 2017.

"The JPY slipped heavily this week and lost more ground overnight as its attractiveness as a safe haven disappears given local virus concerns," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto, in a note.

China reported a decline in new coronavirus infections on Thursday, but scientists warned that the pathogen could spread more easily than previously thought, as two older passengers of a quarantined ship in Tokyo were the last to die.

A series of bleak economic news from Japan has stirred up talk that the country is already in recession.

"Connections to China, exposure to the corona virus, compounded by Japan's own domestic challenges, are increasing fears that the world's third largest economy is expected to shrink for the second consecutive quarter," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

The dollar rose 0.30% against a basket of currencies to 99.864, just below the 100 mark, a level that had not been reached in almost three years.

Financial markets were little affected by US unemployment data. There was encouraging news about the weak manufacturing sector. Other data showed that factory activity in the mid-Atlantic accelerated to a three-year high in February, probably as tensions eased in the 19-month trade war between the United States and China.

The US economy is showing no signs of steam loss, Fed Reserve Chairman Richard Clarida said in an optimistic outlook that showed little concern about the corona virus outbreak.

The Australian dollar fell to a low of almost 11 years when data showing a surprisingly sharp rise in unemployment contributed to further rate cuts at a time when the markets were already overcoming the corona virus. The Aussie was 0.91% lower than the greenback.

Sterling fell to a three-month low against the dollar as the greenback's broad strength undermined recent sterling gains driven by the appointment of a new, possibly high-priced British finance minister.

Reporting by Saqib Iqbal Ahmed; Edited by David Gregorio and Andrea Ricci

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