TOKYO: It was around 112.00 before the BOJ unexpectedly held policy steady earlier this week. The lack of action sent Japan’s currency, the yen, soaring in value against the dollar and the euro and pushed down stock mark indexes worldwide. “This GDP number, while it’s certainly important, may be taking a backseat to some of the other headlines coming from central banks around the world”, said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc. The dollar was last down 0.9 percent against the yen at 107.11 yen after hitting an 18-month low of 106.92.
Eurostat, the official statistics office, said the 19-nation eurozone economy grew 0.6 per cent quarter-over-quarter in the first three months of the year, double the rate of the two previous quarters and 1.6 per cent higher than a year ago. Later that day the Commerce Department said United States first-quarter growth came in at nearly half the rate expected, fuelling worries about the global outlook and turning investors to safe-bet assets, such as the yen.
The broad Euro Stoxx 50 index was lower by 1.62 percent. For the week, the metal is up almost 3%, a rate which, if it holds, would be the biggest weekly climb for eight weeks. Japan’s Nikkei was closed Friday for the Golden Week holidays which will run into next week, but closed 5.2 per cent lower this week. The dollar is off about 4 percent against the yen for the week, on track to post its biggest weekly loss since October 2008. Leading up to the decision, rumors were circling that the BoJ was flirting with additional easing measures.
That was the slowest growth in two years. German bond yields fell as relief spread across markets that the Fed had not strongly signalled that it would raise interest rates in June, while the dollar slid 0.4 percent against a basket of currencies. Gold has been stuck playing second-fiddle to silver prices’ epic catchup for a while but is now poised for its best weekly gain since early March. Given the economic situation there and the inability for inflation to even approach the BOJ’s target of 2%, the central bank may have little choice but to intervene if the Yen continues to rise.
The announcements contradicted market expectations that the central bank would further ease rates to help boost an economy recently hurt by a strengthening yen. The reversal in the United States dollar proved a boon for most commodities with oil reaching 2016 highs for a third straight session. Brent also rose to a 2016 high of $47.45. People walk past a panel displaying the benchmark Hang Seng Index during afternoon trading outside a bank in Hong Kong April 15, 2015.
