NEW YORK (Reuters) - The dollar continued to slump against the yen on Thursday expectations the Bank of Japan was unlikely to intervene with more policy measures, while global growth concerns knocked down equities.
Investors were set to monitor an appearance by Janet Yellen at 5:30 p.m. EDT in a conversation with former U.S. Federal Reserve chairmen for any clues of when the Fed may hike rates again. On Wednesday, minutes from the most recent meeting indicated the central bank 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 1.2 percent against the yen at 108.44, its biggest daily percentage drop in two months. The decline put the greenback’s losses against the yen at nearly 10 percent for the year.
“What (investors) are seeing now is that (Japanese) policymakers aren’t providing the support for dollar/yen that they would have expected,” said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.
“That’s creating some degree of confusion, and of course, prudent risk management suggests one scales back on short positions.”
The surge of money into the perceived safety of the Japanese currency reflects the scale of concern over global growth that has kept Fed rate hikes in check.
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 174.09 points, or 0.98 percent, to 17,541.96, the S&P 500 .SPX lost 24.75 points, or 1.2 percent, to 2,041.91 and the Nasdaq Composite .IXIC dropped 72.35 points, or 1.47 percent, to 4,848.37.
MSCI’s index of world shares .MIWD00000PUS fell 0.74 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 major currencies, was up 0.14 percent at 94.565.
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 1.5 percent at $1,240.21 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 18/32 in price to yield 1.6906 percent after hitting a low of 1.685 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 settled off 1.3 percent to $37.26 a barrel while Brent settled 1 percent lower to $39.43 a barrel.
While investors remain concerned about global growth, Argentina was poised to sell more than $12 billion in sovereign debt, with a yield range expected to be between 7.5 to 8.5 percent, its first international offering since defaulting in 2002.
Additional reporting by Sam Forgione; Editing by Nick Zieminski and Dan Grebler