* Japanese yen at 9-month low as new coronavirus cases
subside
* U.S. Dollar Currency Index at highest since May 2017
(Recasts, updates rates to after open of U.S. market; new
byline, dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Feb 19 (Reuters) - The U.S. dollar climbed on
Wednesday to near a three-year high against a basket of other
currencies and the safe-haven yen sank to a nine-month low as a
decline in the number of new coronavirus cases in China and
expectations for more policy stimulus boosted investors'
appetite for risk.
Strong U.S. data that could support the Federal Reserve's
desire to keep interest rates unchanged after lowering borrowing
costs three times in 2019, supported the greenback.
China posted the lowest daily rise in new coronavirus cases
since Jan. 29. Many view Chinese data on the virus with skepticism, but
sentiment was lifted by a Bloomberg report that Beijing was
considering cash injections or mergers to bail out airlines hit
by the virus.
Those steps would come after this week's cut in the
medium-term lending rate, which has fed expectations for a
reduction in the benchmark loan prime rate. "China is trying to rev up some stimulus to offset some of
the negative economic impacts from the issues going on with the
coronavirus," said Minh Trang, senior FX trader at Silicon
Valley Bank in Santa Clara, California.
Against the Japanese yen, which tends to benefit during
geopolitical or financial stress as Japan is the worlds biggest
creditor nation, the dollar rose 0.96% to 110.91, its highest
since May.
Worries about Japan's economy, which shrank at the fastest
pace in almost six years in the December quarter, were also
weighing on the yen, Trang said.
Investors are awaiting the release of the minutes from the
Federal Reserve's January meeting, due at 1900 GMT.
"The focus will be on the balance sheet management by the
Fed," Trang said.
On Wednesday, the dollar was supported by data that showed
U.S. homebuilding fell less than expected in January while
permits surged to a near 13-year high, pointing to sustained
housing market strength. Other data showed producer prices increasing by the most in
more than one year last month.
The U.S. Dollar Currency Index =USD , which measures the
greenback's strength against six other major currencies, rose
0.24% at 99.688, its highest since May 12, 2017.
The euro bounced briefly above $1.08 but sank below the mark
to trade down slightly against the greenback.
The single currency had earlier fallen to a three-year low
after a survey showed weakening confidence in Germany.
Sterling slipped back under $1.30, shrugging off data
showing an unexpected surge in UK inflation to a six-month high
in January as focus returned to Britain's trade talks with the
European Union and government plans to boost spending.
Yen hits 9-month low as virus case count slows png https://tmsnrt.rs/39KSAJ7
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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