On Friday, the yen sees a 18-month high as investors made predictions the Bank of Japan may be finished adding new stimulus in the economy, ending in strong gains on the week that dragged global stocks lower. With Japan on holiday, speculators pushed the yen through 107.00 per dollar for the first time in almost 3 years. It was near 112,000 prior to the BOJ surprisingly held policy steady this week. It is often viewed as an indication of broader risk hatred among investors; the strong yen paired with a fall on Wall Street overnight drove Asian and Euro stocks into the red. Next, major euro stock markets dropped more than 1% in the largest drop 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,” Stated by an analysts at Bank of America Merrill Lynch, adding a test of 100 yen in the upcoming months is probable.
The index of 300 leading European shares fell 1.3% at 1,355 points, the German DAX and France’s CAC 40 also moved lower near 1.3% and Britain’s FTSE 100 experienced 0.8% losses. Unexpectedly strong first quarter euro zone growth, the fastest growth seen in five years brought the region’s economy above it’s pre-crisis highs- endorsing the euro, holding steady up 0.4% on the day at $1.14. Next, Japan’s Nikkei closed Friday for the Golden Week holidays that will continue to go into next week, but closed 5.2% lower this week.
The yen is seeing more than 4% gains versus the dollar this week, putting on pace for its best week since the global crisis in 2008 and one of its best weeks since the 1990s. Before Thursday’s unexpected conclusion by the BOJ the yen per dollar was at 111.67 not to ease policy any further. Wit that being said, the U.S dollar stayed on its heels after Thursday’s GDP data that displayed the U.S economy almost ground to a halt in the first quarter, growing at only a 0.5% annual rate. This is the slowest recorded growth in two years. The dollar index, a measure of the greenback’s value versus a basket of currencies, dropped 0.4 percent .DXY on Friday and was on track for its third straight monthly drops, for the first time in almost 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 quoted on Friday.