* RBNZ slashes rates 50 bps, kiwi skids 2%, Aussie 1%
* Yen gains as stunned investors seek safety
* Yuan falls again amid U.S.-China trade conflict
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new quote, details, latest prices)
By Tommy Wilkes
LONDON, Aug 7 (Reuters) - New Zealand's dollar fell heavily
on Wednesday after its central bank stunned markets with an
aggressive interest rate cut and said negative rates were
possible, fuelling bets on more global easing.
Meanwhile, the euro fell slightly against the dollar to
$1.1185 EUR=EBS , with poor industrial output data in Germany
weighing on the single currency. While central banks have turned increasingly dovish in
recent months as they try to revive growth and fight low
inflation rates, the extent of the Reserve Bank of New Zealand's
(RBNZ) move caught markets off guard.
The Kiwi currency plunged to its lowest level since early
2016.
"It seems the RBNZ feels the need to get to the lower bound
as quickly as possible. That will encourage thoughts that other
central banks, such as the ECB (European Central Bank), will not
hang around when they next meet," ING analysts said.
The RBNZ slashed rates by 50 basis points against an
expected 25 basis points to 1%, and Governor Adrian Orr said
negative rates were possible. The New Zealand dollar was last down 1.3% at $0.6435
NZD=D3 , having earlier hit $0.6378.
The Aussie fell 0.3% to $0.6735 AUD=D3 as markets ramped
up their bets that Australia would also cut rates faster and
deeper than previously expected. Earlier, the Australian dollar
dropped 1.1% to $0.6677, a level not seen since early 2009.
Analysts said such large moves in two of the traditionally
higher-yielding major currencies had jolted forex markets, and
encouraged a move into the perceived safety of the yen.
The Japanese currency rose 0.2% to 106.27 JPY=EBS ,
although that was still some way from levels seen on Monday when
the escalating U.S.-China trade war panicked investors.
Against the yen, the kiwi dropped 2.3% NZDJPY= , at one
point falling to the lowest since late 2012, while the Aussie
AUDJPY= hit 70.74 yen, the lowest since April 2009.
Against a basket of currencies the U.S. dollar rose slightly
to 97.702 .DXY .
YUAN WEAKENS AGAIN
The Chinese yuan fell again, dropping 0.3% to 7.074
CNH=EBS in offshore markets, although it was above Monday's
lows when Beijing shocked markets by allowing the currency to
fall through the key level of 7 yuan per dollar.
Concerns are growing because the world's two largest
economies are locked in a bitter trade dispute that rapidly
escalated last week when U.S. President Donald Trump said he
would impose more tariffs on Chinese goods.
China responded on Monday by allowing its currency to weaken
past the psychologically important line of 7 per dollar, which
immediately prompted Washington to label Beijing a currency
manipulator. "The RMB (Renminbi) is trading slightly weaker thus far
today, but we believe the combination of central bank easing and
PBoC (People's Bank of China) efforts to slow the pace of RMB
depreciation are keeping risk assets buoyant," Stephen Gallo, an
analyst at BMO Capital Markets said.
Sterling weakened 0.2% to $1.2154 GBP=D3 .
(Editing by Catherine Evans and Alexander Smith)