The dollar slumped against the yen again on Thursday in the wake of minutes from the last U.S. Federal Reserve meeting and expectations the Bank of Japan was unlikely to intervene, while global growth concerns weighed on equities.
Investors were set to monitor an appearance by Janet Yellen at 5:30 p.m. EDT (2130 GMT) in a conversation with former Federal Reserve chairmen. On Wednesday, meeting minutes indicated the Fed is unlikely to raise interest rates before June, as a number of policymakers argued headwinds to growth would probably persist.
A cautious Fed and concerns about global growth sent the dollar to a 17-month low of 107.67 against the yen JPY=. An optimistic economic outlook from the BOJ also diminished expectations the central bank would take additional monetary easing steps.
The dollar was last down 1.4 percent at 108.01, its biggest daily percentage drop in two months. The decline put the greenback’s losses at about 10 percent for the year.
“Everybody was short yen for a long time,” said Ihab Salib, head of international fixed income at Federated Investors in Pittsburgh. “The move up in yen has been so aggressive and one-sided and quick that it took a lot of people by surprise.”
The surge of money into the perceived safety of the Japanese currency reflects the scale of concern over global growth that has kept the Fed from proceeding with another rate hike.
That concern also sent equities lower, with each of the 10 major sectors on Wall Street in the red, while the pan-European FTSEurofirst 300 share index .FTEU3 was on track for its fourth straight week of declines.
The Dow Jones industrial average .DJI fell 119.2 points, or 0.67 percent, to 17,596.85, the S&P 500 .SPX lost 18.24 points, or 0.88 percent, to 2,048.42 and the Nasdaq Composite.IXIC dropped 48.80 points, or 0.99 percent, to 4,871.92.
MSCI’s index of world shares .MIWD00000PUS fell 0.57 percent. The FTSEurofirst 300 closed down 0.76 percent, hurt by a drop of more than 2 percent in financials.
The dollar index .DXY, which measures the greenback against a basket of six majorcurrencies, was up 0.17 percent at 94.594.
The U.S. dollar rally that began in mid-2014 has nearly run its course and will only gain slightly over the coming year, according to a Reuters poll of strategists who said risks to their forecasts are tilted more to the downside.
The concerns over debt and growth-related risks to companies worldwide, particularly in developing economies, were also visible in minutes of the European Central Bank’s March policy meeting.
The lower dollar and growth concerns boosted demand for safe-haven assets such as gold and U.S. Treasuries.
Gold XAU= was up 1.2 percent at $1,236.60 an ounce after hitting a two-week high of $1.243.50.
U.S. Treasury yields fell broadly to their lowest levels since late February. Benchmark 10-year Treasuries US10YT=RR rose 15/32 in price to yield 1.7027 percent after hitting a low of 1.694 percent.
Oil prices also declined after industry data suggested a key pipeline shutdown had not reduced crude flows to the U.S. storage base by as much as expected.
U.S. crude CLc1 was last off 2.1 percent to $36.97 a barrel while Brent fell 1.7 percent to $39.16 a barrel.