SYDNEY (Reuters) - The yen held onto hefty gains on Friday (April 29) after the Bank of Japan surprised markets by declining to adopt fresh stimulus, while an Apple-inspired slide on Wall Street soured sentiment in stock markets.
The absence of Tokyo for a holiday was a welcome relief to many given the pandemonium caused by Thursday's BoJ decision.
The yen surged almost 3 per cent against the US dollar, the euro and sterling in reaction to the BOJ's inaction. Some media reports last week had claimed it would cut rates deeper into negative territory.
The yen was encamped at 108.00 per dollar in early Asian trade, having travelled all the way from 111.67 ahead of the BOJ news. That was its biggest one-day gain since early 2011.
The next major target is 107.63 and a break there would take the yen to levels not seen since late 2014.
"Whether the pair breaks the recent low at 107.63 and accelerates its downside is uncertain," wrote analysts at JPMorgan. "Our economists still expect the BOJ to ease in July, but the impact on the yen should be limited as it will be unable to out ease other central banks."
JPMorgan expects the yen to continue to strengthen over time with a target of 102.00 per dollar by early next year.
The US Federal Reserve's decision on Wednesday to hold rates steady and offer only a halfhearted signal on the chance of a hike in June also weighed on the dollar.
Against a basket of currencies, the greenback was down at 93.718, while the euro edged up to US$1.1357 having amassed a 1 per cent gain for the week so far.
The yen's rapid ascent hammered Japanese exporters on Thursday and left the Nikkei down 3.6 per cent on the day, and 5 per cent for the week.
Early on Friday, MSCI's broadest index of Asia-Pacific shares outside Japan was flat, while South Korea's market slipped 0.3 per cent.
On Wall Street, shares took a late spill after Apple shed 3 per cent when billionaire investor Carl Icahn said he no longer has a position in the tech giant.
The Dow ended Thursday down 1.17 per cent, while the S&P 500 lost 0.92 per cent and the Nasdaq 1.19 per cent. European shares had started weaker but steadied into their close.
Not helping sentiment was news the US economy braked hard in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar undercut exports.
Gross domestic product increased at a 0.5 per cent annual rate, the weakest since early 2014.
Yet jobless claims fell again and analysts remain optimistic payrolls data out next week will show another solid gain.
The reversal in the US dollar proved a boon for most commodities with oil reaching 2016 highs for a third straight session. Brent has surged nearly 80 per cent since hitting 12-year lows of around US$27 a barrel in late January.
Early on Friday, Brent crude eased 45 cents to US$47.69 a barrel, while US crude lost 23 cents to US$45.80. The two benchmarks are still up about 20 per cent in April and on track for their largest monthly gain in a year.