The dollar skyrocketed to its highest in four years versus a basket of major rivals Friday, after the Bank of Japan’s surprising increase in economic stimulus gave global stocks a shot in the arm.
In a 5-4 vote, the Policy Board led by Governor Haruhiko Kuroda decided to raise the monetary base at an annual pace of about 80 trillion yen. The earlier plan was to increase it by about 60-70 trillion yen.
Markets now expect similar measures from the European Central Bank, as policy makers will want to avoid the sort of prolonged deflation that has gripped Japan.
The Bank of Japan announcement overshadowed a slew of mixed economic data from the U.S. and Europe.
The dollar surged above Y112 versus the yen to its highest levels in almost seven years. This month’s sharp gains have the dollar up more than 14 percent compared to last year.
Post BoJ-gains took the dollar to a fresh 2-year peak versus the euro, with the pair now trading at $1.2480 at one point this morning.
There was less movement against the sterling. Following an initial uptick on the BoJ news, the dollar settled near $1.60 for a second day in a row.
In economic news from the U.S., a report from the Commerce Department showed personal spending to have unexpectedly decreased in the month of September, dipping by 0.2 percent, after climbing by 0.5 percent in August.
Additionally, the Commerce Department said personal income edged up by a lower than expected 0.2 percent in September following a 0.3 percent increase in the previous month.
German retail sales declined at the fastest pace since May 2007 in September, data from Destatis showed.