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 With Japan on holiday, speculators drove the yen through 107.00 per
dollar for the first time since October 2014. It was around 112.00
before the BOJ unexpectedly held policy steady earlier this week.
Often seen as a sign of broader risk aversion among investors, the
strong yen coupled with a decline on Wall Street overnight pushed
Asian and European stocks into the red.
Major European stock markets fell more than 1 percent in their
biggest fall in over three weeks, while U.S. futures pointed to a
lower open on Wall Street'.
"Dollar/yen is not undervalued, and global macro conditions are by
no means positive for risk sentiment," Bank of America Merrill Lynch
analysts wrote in a note to clients, adding that a test of 100 yen
in the coming months is likely.
The index of 300 leading European shares was down 1.3 percent at
1,355 points, the German DAX and France's CAC 40 were
also down around 1.3 percent, and Britain's FTSE 100 was 0.8 percent
lower.
Surprisingly strong first quarter euro zone growth - the fastest
growth in five years finally bringing the region's economy above its
pre-crisis peak - supported the euro, keeping it up 0.4 percent on
the day at $1.14.
A high exchange rate hurts exporters, however, and European stocks
felt the brunt.
First quarter U.S. and European earnings reports continued to stream
in. Notable was Amazon's upbeat figures that sent the stock up
almost 13 percent, easing the gloom after Apple <AAPL.O> shed 3
percent when billionaire investor Carl Icahn said he no longer has a
position in the tech giant.
Earlier MSCI's broadest index of Asia-Pacific shares outside Japan
lost 0.5 percent, on track for a decline of 1.7 percent for the
week. That would be its biggest weekly loss in over two months.
DOLLAR DIP
Japan's Nikkei was closed Friday for the Golden Week holidays which
will run into next week, but closed 5.2 percent lower this week.
The yen is up more than 4 percent against the dollar this week,
putting it on track for its best week since the depths of the global
crisis in October 2008 and one of its best weeks since the 1990s.
It had been at 111.67 yen per dollar before Thursday's surprise
decision by the BOJ not to ease policy further.
The dollar remained on the back foot following Thursday's GDP data
that showed the U.S. economy virtually ground to a halt in the first
quarter, expanding at only at 0.5 percent annualized pace. That was
the slowest growth in two years.
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The dollar index, a measure of the greenback's value against a
basket of currencies, fell 0.4 percent on Friday and was on course
for its third consecutive monthly decline, something not seen for
five years.
"The decline in U.S. yields leaves the dollar vulnerable and we
remain long euro/dollar, looking for the pair to reach $1.16 in the
next two months," BNP Paribas currency strategists said on Friday.
Elsewhere in currency markets China's central bank fixed the yuan
0.5 percent higher on Friday, marking its biggest one-day
appreciation since the landmark revaluation in July 2005.
The 10-year U.S. Treasury yield was flat on the day at 1.84 percent,
and down around 10 basis points since the Fed's policy meeting on
Wednesday.
The reversal in the U.S. dollar proved a boon for most commodities
with oil reaching 2016 highs for a third straight session. Brent has
climbed nearly 80 percent since hitting 12-year lows of around $27 a
barrel in late January.
Brent crude was up 0.5 percent at $48.40 a barrel, poised for a
weekly gain of 7 percent. U.S. crude was up nearly 1 percent at
$46.43, on track for an increase of more than 6 percent for the
week.
The two benchmarks are still up 20 percent or more in April, with
Brent on track for its largest monthly gain since May 2009.
The weak dollar helped propel gold higher for the fifth straight
day, up nearly 1 percent at $1,276 an ounce.
(Reporting by Jamie McGeever; editing by Dominic Evans)
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