* Dollar bulldozes through currency markets, yen at 10-month
low
* China rate cut done, market focus returns to virus spread
* Virus cases in South Korea, deaths in Japan drive stocks
lower
* Asian currencies sold against U.S. dollar
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Feb 20 (Reuters) - The dollar trampled everything in
its path on Thursday after a steep and sudden slide in the
Japanese yen called into question its safe haven status and
others from the euro to the Australian dollar were all knocked
over.
The dollar has surged almost 2% since Tuesday against the
yen, reaching its highest in almost 10 months, and climbed to
near three-year highs against the euro.
Its DXY index .DXY against the world's most traded
currencies, which is up 3.6%, rose overnight to its highest
since May 2017. It also gained to its best levels of the year
against China's offshore yuan and MSCI's index of emerging-
market currencies.
A host of reasons were cited for the move, among them the
outperformance of U.S. economic and earnings numbers and worries
over the threat of recessions in Japan and the euro zone.
"I think this has really brought into focus the role the
dollar is playing as a safe haven," said Rabobank senior
currency strategist Jane Foley. Japan's proximity to China's
coronavirus problems and recent poor economic data there had
also turned markets off the yen, she said.
China had reported a drop in new virus cases and announced
an interest rate cut to buttress its economy. But
South Korea recorded an increase in new case, Japan reported two
deaths, and researchers said the pathogen seemed to spread more
easily than previously believed.
European stock markets opened little changed. London
.FTSE , Frankfurt .GDAXI and Paris .FCHI markets were flat
to 0.3% lower after the first hour of trading. .EU
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slipped 0.3%, led by drops on Hong Kong's Hang
Seng .HSI and South Korea's KOSPI .KS11 . Wall Street futures
for the S&P 500 ESc1 were lower.
DOLLAR BULLS
The yen had been undermined by a run of weak data this week,
but traders were unnerved when it blew past a support level at
110.30 per dollar.
It dropped nearly 1.4% against the dollar JPY= , its
sharpest fall in six months, and 2% against the Norwegian krone
- its sharpest daily drop in almost three years NOKJPY=R .
The euro slipped 0.1% lower to $1.079 EUR= . Its 3.7%
plunge since the start of the year is its worst start to a year
since 2015.
"Nearness to China and dependence on China have not helped
the yen as a risk-off. We have seen the yen and gold diverging
for a while and this may not be the end of it," said Shafali
Sachdev, head of FX in Asia at BNP Paribas Wealth Management.
"The kind of classic correlations between U.S. yields and
the yen, those have been kind of breaking down ... we need to
see past this virus situation to see whether the yen will regain
its safe-haven status."
The skittish mood had investors dumping Asian currencies.
The Singapore dollar SGD=D3 dropped to an almost three-year
low and the Korean won KRW= weakened past 1,200 to the dollar.
The Australian dollar AUD=D3 fell 0.6% to an 11-year low
of $0.6633 after a surprise rise in unemployment. AUD/
Bonds were slightly firmer, oil prices held overnight gains
that lifted Brent to near $60 a barrel O/R and gold remained
around $1,609 per ounce XAU= .
"Markets have taken a step back because the authorities
won't do any major stimulus until they are completely sure the
virus has stopped" said Sean Darby, global equity strategist at
Jefferies in Hong Kong.
"There's no point in doing it when people are sitting at
home. They can't even spend the money or use it."
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