The yen hit an 18-month high yesterday as investors bet the Bank of Japan might be done adding stimulus to the economy, while stocks in Europe and on Wall Street headed lower as earnings disappointed.
Major European stock indexes closed down more than two per cent and US equities were about 0.7 per cent lower.
The yen was on track for its biggest weekly gain since the 2008 financial crisis, also spurred by a weak reading of US economic growth on Thursday and the Federal Reserve’s cautious tone this week.
The yen has gained three per cent since Thursday when the BOJ decided to hold monetary policy steady in the face of soft global demand and the yen’s recent sharp rise.
The BOJ move defied expectations for increased stimulus measures to fight deflation.
The dollar was last down 1.12 per cent against the yen at 106.87 yen after hitting an 18-month low of 106.70. The dollar is off about four per cent against the yen, on track to post its biggest weekly loss since October 2008.
The dollar also tumbled against the euro, with the euro hitting its highest level against the dollar in two and a half weeks, at $1.1459. The euro was last up 0.76 per cent against the dollar at $1.1437.
European equities posted their biggest weekly drop in more than two months, with the FTSEurofirst 300 index of leading European shares falling 2.2 per cent and the euro zone blue chip Euro STOXX 50 tumbling 3.1 per cent.
MSCI’s all-country world stock index fell 0.6 per cent.
On Wall Street, the Dow Jones industrial average fell 111.8 points, or 0.63 per cent, to 17,718.96. The S&P 500 slid 15.7 points, or 0.76 per cent, to 2,060.11 and the Nasdaq Composite lost 39.86 points, or 0.83 per cent, to 4,765.43.
Amazon shares jumped 9.32 per cent to $658.11 a day after the company reported profit and revenue that swept away analysts’ estimates, along with doubts about the online retailer’s investment spree.
Facebook earlier in the week reported revenue rose more than 50 per cent, driving its shares up more than seven per cent on Thursday. Facebook fell 0.24 per cent to $116.45 yesterday.
Brent crude trimmed gains after its biggest monthly rise in seven years.
It touched 2016 highs as a weak dollar and falling US production tempered concerns about an oil glut.
A looming rise in Middle East output capped gains, but investor sentiment held the optimism that has helped lift oil futures nearly 80 per cent from January lows.
Brent futures traded at $47.84a barrel, down 0.62 per cent and US crude was off 0.7 per centat $45.70.
US Treasury prices fell, with the benchmark 10-year note trading at break-even in price, to yield 1.8404 per cent.