News: FOREX-Dollar hits 20-yr high as yen tumbles on dovish Bank of Japan

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    (Rewrites throughout; changes byline; previous LONDON)

    The dollar hit a 20-year high against rivals on Thursday as the Bank of Japan doubled-down on its dovish policy, sending the yen to its weakest level since 2002, while the euro hit a five-year low on growth concerns for the region.

    The dollar shot past the key level of 130 yen after the BOJ strengthened its commitment to keep interest rates ultra-low by vowing to buy unlimited amounts of bonds daily to defend its yield target.

    "The BoJ gave the 'all clear' to continue selling the yen," said Lee Hardman, a currency analyst at MUFG Bank in London.

    There had been some market speculation the BOJ might step back a little given the pressure building across foreign exchange markets.

    A finance ministry official responded that Japan will take appropriate action in currency markets, calling recent moves "extremely worrying."

    The yen JPY=EBS was last at 131.24, the weakest since April 2002, with the greenback up more than 2% against the Japanese currency on the day.

    The weak yen helped to catapult the dollar to its highest level since Dec. 2002 against a basket of currencies. The greenback has benefited from expectations the Federal Reserve will hike rates faster than peers, and likely expand the yield gap between U.S. and Japanese government bonds (JGBs).

    “This move in dollar/yen has been primarily due to long-end spread widening between U.S. Treasuries and JGBs,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.

    The dollar index =USD was last at 103.73, up 0.74% on the day, after reaching as high as 103.93.

    The greenback pared gains after data showed U.S. economic growth unexpectedly contracted in the first quarter as a resurgence in COVID-19 cases disrupted activity.

    Rai said, however, that the data did not necessarily reflect a weak economy, but was unduly impacted by a sharply wider trade deficit, which was due to surging imports.

    “If you actually peel that away and look at the underlying consumption and investment trends, both of those still look reasonably healthy,” Rai said.

    Meanwhile the euro dropped below the psychological level of $1.05 as investors remained nervous about Russia cutting off gas supplies to parts of the region for refusing to pay in roubles.

    Russia's Gazprom GAZP.MM said on Thursday that Poland is still buying Russian gas in Germany, and that reverse supplies to Poland via the Yamal pipeline amount to around 30 million cubic metres per day.

    Meanwhile euro zone government bond yields jumped on strong inflation data, which once fuelled expectations for a quicker pace of monetary tightening by the European Central Bank and could provide some support to the single currency.

    The euro EUR=EBS was last $1.0501, after earlier getting as low as $1.0470, the lowest since Jan. 2017.

    	======================================================== 
    	Currency bid prices at 10:16AM (1416 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	   High Bid	Low Bid 
    											  Previous				   Change					
    											  Session											  
     Dollar index	  =USD	   103.7300	   102.9900	+0.74%		 8.433%		+103.9300   +102.9900 
     Euro/Dollar	   EUR=EBS	$1.0501		$1.0560	 -0.56%		 -7.64%		+$1.0565	+$1.0470 
     Dollar/Yen		JPY=D3	 131.1250	   128.4300	+2.10%		 +14.01%	   +131.1250   +128.3650 
     Euro/Yen		  EURJPY=	137.72		 135.59	  +1.57%		 +5.66%		+137.9800   +135.4400 
     Dollar/Swiss	  CHF=EBS	0.9735		 0.9693	  +0.42%		 +6.70%		+0.9759	 +0.9681 
     Sterling/Dollar   GBP=D3	 $1.2422		$1.2547	 -1.00%		 -8.15%		+$1.2569	+$1.2416 
     Dollar/Canadian   CAD=D3	 1.2859		 1.2819	  +0.30%		 +1.69%		+1.2880	 +1.2798 
     Aussie/Dollar	 AUD=D3	 $0.7066		$0.7127	 -0.83%		 -2.78%		+$0.7162	+$0.7067 
     Euro/Swiss		EURCHF=	1.0223		 1.0229	  -0.06%		 -1.43%		+1.0241	 +1.0190 
     Euro/Sterling	 EURGBP=	0.8453		 0.8417	  +0.43%		 +0.62%		+0.8460	 +0.8383 
     NZ				NZD=D3	 $0.6463		$0.6542	 -1.15%		 -5.53%		+$0.6543	+$0.6455 
     Dollar/Dollar																					 
    
     Dollar/Norway	 NOK=D3	 9.4110		 9.3290	  +0.84%		 +6.79%		+9.4535	 +9.2835 
     Euro/Norway	   EURNOK=	9.8837		 9.8503	  +0.34%		 -1.29%		+9.9219	 +9.7903 
     Dollar/Sweden	 SEK=	   9.8399		 9.8420	  -0.52%		 +9.12%		+9.9052	 +9.7078 
     Euro/Sweden	   EURSEK=	10.3340		10.3876	 -0.52%		 +0.98%		+10.3971	+10.2541 
    	<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    Euro/dollar at 5-year lows, dollar/yen at 2-decade highs	https://tmsnrt.rs/38tfGJ2 
    
    	^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>                        
 
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