FOREX-Yen hits 7-week high vs dollar as risk sentiment sours

* Yen near 7-week high vs dollar, 3 1/2-year high vs euro
* Doubts on ECB stimulus, U.S-China spat weigh on mood
* Brazilian real near record low
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, May 7 (Reuters) - The safe-haven yen flirted with a
seven-week high against the dollar on Thursday as investors
limited their exposure to riskier assets amid dire global
economic data, rising trade tensions and concerns over the euro
zone.
The yen rose to seven-week high of 105.985 per dollar JPY=
and last stood at 106.04. Against the euro, it traded at 114.63
EURJPY= yen per euro, having hit a 3 1/2-year high of 114.43
overnight.
"The yen is gaining as there are some questions over the
European Central Bank's stimulus and as tensions between the
United States and China increase again," said Shinichiro Kadota,
senior strategist at Barclays.
Germany's highest court on Tuesday gave the European Central
Bank three months to justify purchases under its bond-buying
programme, or lose the Bundesbank's participation in one of its
main stimulus schemes. U.S. Secretary of State Mike Pompeo on Wednesday renewed his
aggressive criticism of China, as the Trump administration
weighs punitive actions against Beijing over its early handling
of the virus outbreak. President Donald Trump said on Wednesday he was closely
watching to see if China is fulfilling its obligations under a
Phase 1 trade deal the two countries signed in January before
the coronavirus spread globally. On the economic data front, U.S. private employers laid off
a record 20.2 million workers in April in response to the novel
coronavirus outbreak. The staggering number, while widely anticipated since 30.3
million people had filed claims for unemployment benefits since
March 21, underscored the colossal damage to the economy.
In Europe, euro zone business activity almost ground to a
halt last month while retail sales suffered their largest
decline on record in March amid government-imposed lockdowns.
In the UK, British construction suffered its sharpest
decline on record, more than twice as large as the previous
month, even though general construction work was not ordered by
the government to stop. The euro changed hands at $1.0799 EUR= after three
straight days of falls so far this week, hit also by the German
court decision challenging the country's participation in the
European Central Bank's stimulus.
The British pound eased a tad on Thursday to $1.2324
GBP=D4 , touching its lowest level in almost two weeks.
The risk-averse mood undermined emerging market currencies.
The Brazilian real dropped to 5.714 per dollar BRL= , just
a hair above its record low touched last month after rating
agency Fitch lowered the country's credit rating to negative.
Brazil's central bank slashed interest rates more than
expected on Wednesday in a move aimed at shoring up the
coronavirus-hit economy but one also likely to undermine the
real further. The currency has lost 4% so far this month, and 29.7% since
the start of year, the worst among major emerging market
currencies.