* Court queries German participation in ECB bond purchases
* Euro falls to 3yr low vs yen; yen hits 7 week peak vs
dollar
* Yuan at month low in onshore trade
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, May 6 (Reuters) - The yen scaled a three-year
high against the euro and a seven-week peak on the dollar on
Wednesday, after a court decision challenging German
participation in Europe's stimulus programme and worries about a
bumpy global recovery spooked investors.
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 as a participant in a scheme
aimed at cushioning the economic blow from the coronavirus.
The news sent the euro EUR= to a one-week low of $1.0826,
where it has stayed, and a three-year trough of 115.09 yen
EURJPY= that it hit in the Asian session, as traders worried
about both the scheme and euro zone turmoil.
The yen JPY= also edged up against the dollar, pushing
through resistance to a seven-week high of 106.22, though
volumes were light with Japanese markets shut for the final day
of a national holiday.
Other majors were mostly in stasis, as dire economic
indicators and concerns about U.S.-China tensions held recovery
optimism in check.
"The yen has been the pick of the major currencies since the
crisis started, and that should continue," Kit Juckes, head of
FX strategy at Societe Generale, said in a note.
"The level of yields is biggest driver of yen strength and
they'd have to go up a fair bit globally to make the yen
weaken." Long-dated U.S. yields rose overnight, as the U.S.
plans a borrowing spree, but remain near historic lows. US/
The yen is up about 2% on the dollar and nearly 6% on the
euro for the year so far. It hit a three-week high against the
Korean won KRWJPY= on Wednesday and is not far from a month
high against the Australian dollar AUDJPY= .
The Aussie and kiwi were each steady on the greenback,
above 64 cents and 60 cents, respectively. AUD/
The Aussie AUD=D4 last sat at $0.6432 and the New Zealand
dollar NZD=D4 at $0.6052. The pound GBP= was steady at
$1.2431.
The German court decision is unlikely to completely derail
Europe's stimulus programme since the European Central Bank is
broadly expected to be able to justify its bond purchases.
But the resulting uncertainty is only the latest strain on
Europe's teetering coronavirus response.
The pandemic's heavier toll on debt-laden Italy and Spain,
compared with Germany, has revived tensions between wealthy
northern and poorer southern European member states - leaving
politicians divided and the ECB to do the heavy lifting.
"This will be the second time we have been in a major crisis
where the ECB has been put under heavy pressure," St. Louis
Federal Reserve president James Bullard said on Tuesday.
"This very much is a stress test for the euro and the
European project to be able to react to this crisis in an
effective way," Bullard said in webcast remarks. "I am just
hopeful this will be a catalyst." Elsewhere, U.S. President Donald Trump again pressed China
about the origins of the outbreak that has killed more than a
quarter of a million people since it started in the Chinese city
of Wuhan late last year. Markets are awaiting a response from Beijing to his latest
comments, which last week included a threat of fresh tariffs on
Chinese goods.
China's yuan, a barometer of Sino-U.S. tension, has
recovered some ground lost on Friday and Monday in offshore
trade CNH=D3 though resumed onshore trade, after the May Day
break, at a month-low 7.0885 per dollar CNY= . CNY/