NEW YORK The dollar and euro fell sharply against the yen on Tuesday as hopes for additional stimulus out of Japan faded, while bargain-hunting on Wall Street lifted stock prices after three days of losses.
The greenback fell 0.60 percent against other major currencies, and the decline was felt in other markets. Prices of oil and gold jumped, and U.S. Treasuries added to two days of strong price gains after the government sold more debt.
For a second time this week, policymakers from a major central bank deflated expectations of additional stimulus, with the governor of the Bank of Japan, Haruhiko Kuroda, saying on Tuesday there was no need for more monetary support to escape deflation.
Investors had expected the BoJ to indicate more support was forthcoming, and the yen rose as the Bank of Japan kept its policy steady.
"You had a lot of players who were short the yen, and Kuroda dashed the hopes of stimulus," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
The comments from the Bank of Japan came after policymakers from the European Central Bank on Monday said they would ease policy further only if they thought the inflation outlook had deteriorated sharply.
Against the yen, the dollar lost 1.4 percent, to 101.52 yen, the lowest level seen since March 19, when Federal Reserve Chair Janet Yellen seemed to suggest that U.S. interest rates could rise earlier than markets expected.
The euro also lost substantial ground against the yen, falling more than 1 percent to 140.18 yen, the lowest level since March 28.
The yen marked its strongest one-day gain against the dollar and its biggest single-day rise against the euro in four weeks, according to Reuters data.
The dollar index .DXY, which measures the dollar against a basket of six major currencies, was off 0.60 percent and near lows last seen on March 19.
The dollar has been facing headwinds since the government on Friday reported the U.S. economy added 192,000 jobs in March, down from about 200,000 in February.
"The data depicted the world's biggest economy still struggling to shift into a higher gear, which keeps pressure off the Federal Reserve to raise rates for a while yet," Joe Manimbo, an analyst at Western Union Business Solutions in Washington, said in a note to clients.
On Wall Street stocks rose as investors bought beaten-down shares of social media and Internet companies.
The Dow Jones industrial average .DJI rose 10.27 points or 0.06 percent, to 16,256.14, the S&P 500 .SPX gained 6.92 points or 0.38 percent, to 1,851.96 and the Nasdaq Composite .IXIC added 33.234 points or 0.81 percent, to 4,112.986.
The day's biggest gainers included Amazon.com Inc (AMZN.O), up nearly 3.0 percent at $327.07, Yahoo! Inc (YHOO.O), up 2.3 percent at $33.83, and LinkedIn Corp (LNKD.N), up nearly 6 percent to $169.10. The Global X social media index (SOCL.O) rose 2.4 percent to 18.50.
Gains in the blue-chip Dow Jones industrial average were capped by a decline in bank stocks. Goldman Sachs Group (GS.N) fell 1.3 percent, and JPMorgan Chase & Co (JPM.N) slipped 0.3 percent.
Aluminum maker Alcoa Inc (AA.N) kicked off the earnings season after the bell on Tuesday, reporting a first-quarter loss due to a restructuring charge. But the stock jumped more than 2 percent in extended-hours trade.
Global stock markets were mixed, with the MSCI world equity index .MIWD00000PUS up 0.35 percent.
U.S. Treasuries prices rose, adding to two days of strong gains, after the government sold $30 billion in new three-year notes to better-than-average demand at a high yield of 0.90 percent. It was the first of several auctions this week.
Benchmark 10-year notes were last up 5/32 in price to yield 2.68 percent, down from 2.70 percent late on Monday. Thirty-year bonds gained 12/32 in price to yield 3.54 percent, down from 3.56 percent.
In commodity markets, gold was trading around two-week highs, up nearly 1 percent from the previous session at $1,309.10 an ounce. A traditional safe haven for investors, gold rose on the sharply lower dollar and renewed tensions between the United States and Russia over Ukraine.
U.S. crude for May gained 2.1 percent to $102.59 a barrel, pushed up by the renewed tensions over Ukraine, a major supply route for Russian gas to Europe. The rise was capped by expectations U.S. crude oil stocks were building up. <O/R>
Brent rose $1.89, or 1.9 percent, to $107.71 a barrel.
(Reporting by Michael Connor in New York; additional reporting by Marc Jones in London and Angela Moon, Karen Bretell and Richard Leong in New York; Editing by Leslie Adler and Dan Grebler)