* Dollar drops against the yen as BoJ holds steady
* U.S. stocks mostly lower after disappointing U.S. GDP
* Brent crude falls to around $103 a barrel
By Leah Schnurr
NEW YORK, April 26 The U.S. dollar tumbled
against the yen on Friday after the Bank of Japan left its
monetary policy unchanged, while benchmark U.S. bond yields fell
to near 4-1/2-month lows after the U.S. economy grew less than
expected in the first quarter.
The disappointing growth rate spurred concerns about a tepid
outlook for the United States which, along with recent concerns
that China's growth is slowing, also hit the price of oil. Brent
crude fell to just above $103 a barrel after rising $3 in the
past two sessions.
China and the United States are the world's two largest oil
The BoJ held off from announcing new monetary policy on
Friday, which was not unexpected, but board members suggested
inflation may still fall short of the central bank's target for
some time. The outlook on inflation in the bank's semi-annual
economic report highlighted concerns that the BoJ has an
unrealistic goal in its battle to end 15 years of
The BoJ's announcement in early April of plans for $1.4
trillion in new monetary stimulus triggered a sharp selloff in
the yen. However, traders said market expectations for ongoing
weakness in the yen had come too far, too quickly. Recent
lackluster U.S. data has added to dollar selling, which
accelerated on Friday.
"The selling started to feed on itself, and everyone started
to jump on the selling bandwagon," said Charles St-Arnaud,
foreign exchange strategist at Nomura Securities in New York.
The dollar fell as low 97.54 yen and was down 1.2
percent at 98.02 in late New York trade.
U.S. gross domestic product expanded at a 2.5 percent annual
rate in the first quarter. While that was a jump from the tepid
growth seen in the final quarter of last year, it disappointed
expectations for a 3 percent pace.
The data and weakness on Wall Street lifted bond prices,
with 30-year Treasuries up 28/32 at 105-07/32 to yield 2.862
The benchmark 10-year note's yield fell to 1.665 percent,
just a shade higher than the low of 1.643 percent reached
earlier in the week.
"The thoughts about slower growth and disinflation have been
mostly priced at these levels," said Mike Cullinane, head of
Treasuries trading at D.A. Davidson in St. Petersburg, Florida.
"If we were to see another month of weak data, we could see
yields grind lower."
The data could raise doubts about the ability of the economy
to absorb government spending cuts and higher taxes and may fuel
speculation of the possibility of more Federal Reserve measures
to boost growth, or at least keep the Fed's current stimulus
plans in place.
Wall Street ended little changed in light volume, with a
slight loss on the S&P 500 ending a five-day winning streak for
"We traded off a decent amount after the GDP number but we
didn't break any technical levels or really didn't get much
momentum in the selloff past late morning," said Paul Zemsky,
head of asset allocation at ING Investment Management in New
"I guess there was some bottom fishing. There was so much
fear of poor earnings going into earnings season that this is
still somewhat of a positive surprise."
A drop in Amazon.com weighed on the market after
the Internet retailer gave a disappointing outlook, sending its
shares down more than 7 percent.
The Dow Jones industrial average edged up 11.75
points, or 0.08 percent, to 14,712.55. The Standard & Poor's 500
Index slipped 2.92 points, or 0.18 percent, to 1,582.24.
The Nasdaq Composite Index fell 10.72 points, or 0.33
percent, to 3,279.26.
Investors in European equities also took a breather after
five days of gains. Europe's top shares on the FTSEurofirst 300
closed down 0.4 percent, and world shares
were off 0.2 percent.
A growing belief that the European Central Bank will react
to the recent deterioration in the euro zone's economy by
cutting interest rates next Thursday helped European stocks rise
this week, pushed the euro to a three-week low and contributed
to a fall in bond yields.
A gloomy new set of surveys from the ECB further supported
those rate cut calls, as they underscored the slowdown in
lending and the difficulties companies in the bloc are facing to
Brent fell 25 cents to $103.16 a barrel, while U.S.
crude settled down 64 cents at $93.00.