* Yen continues slide, hits 10-month low
* Dollar index hits highest since May 2017
* Australian dollar falls on weak labour market report
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, Feb 20 (Reuters) - The Japanese yen fell to a
10-month low on Thursday, extending its previous day's slide
that saw the currency breach a key technical level against a
broadly strengthening dollar.
A run of dire economic news out of Japan has stirred talk
the country is already in recession and that Japanese funds were
dumping local assets in favour of U.S. shares and gold.
Improving risk appetite in global markets has also hit the
yen, which usually tends to benefit in times of market stress.
China reported a drop in new infections on Thursday, but
scientists warned the pathogen may spread more easily than
previously believed as two elderly passengers from a ship
quarantined in Tokyo became the latest to die. China also cut its benchmark lending rate on Thursday, as
widely expected, as the authorities move to lower financing
costs for businesses. "There's a combination of factors (for the yen weakness) - a
broader strengthening of the dollar on the back of the
coronavirus which is making the dollar more attractive across
the board," said Lee Hardman, currency strategist at MUFG in
London.
"To a degree, it was a catch-up move."
Hardman also noted a pickup in purchases of foreign bonds
and equities by Japanese investors during dips in the yen in
recent weeks.
The yen fell further to 111.84 to the dollar, its lowest
since April 2017 JPY= . On Thursday, its smashed a key
technical barrier of around 110.30 that had held firm since last
The euro was 0.1% lower at $1.079 EUR=
The dollar also rose 0.3% on the Chinese yuan CNY= to 7.0215
and the Australian dollar AUD=D3 sink to 11-year lows at
$0.6630.
Against a basket of peers, the greenback hit its highest
since May 2017 and is now up over 3.5% this year. .DXY
"The critical thing to understand is the Yen weakness is not
so much "Risk on" as it is Japanese asset managers heading for
the Tokyo market exit in droves," said Stephen Innes, Asia
Pacific Market Strategist at AxiCorp.
"With the USD inflow unyielding, its unclear what could stem
this tide other than U.S. administration talking down the
dollar."
U.S. President Donald Trump has long protested that the
dollar was too strong and unfairly penalising U.S. business.