Asia shares rally, yen climbs as dollar backtracks

“The jump in yields and the further strengthening of the yen will lower the value of assets owned by Japanese investors,” analysts at Capital Economics said.

“Insurance firms will be most affected by falling bond prices, whereas pension funds have most to lose from a stronger exchange rate. However, we doubt that lower investment returns carry systemic risks.”

Capital also now expects the dollar to drop towards 125 yen in 2023. The dollar was already down at 131.84 yen, having shed 3.6% for the week so far, though it had found some support around 130.40.

The euro has lost 3.0% on the yen for the week at 140.26. With all the action in the yen, the euro was a shade firmer on the dollar at $1.0640.

Sterling had less luck after British public borrowing hit a record in November and strikes across the country darkened the UK economic outlook. The pound was holding at $1.2114, having hit a three-week low overnight.

The pullback in the dollar has been a boon for gold, which was up 1.4% on the week so far at $1,818 an ounce.

Oil prices rallied after data showed a larger-than-expected draw in US crude stockpiles, though a massive snowstorm is expected to blanket much of the US and hit travel-related demand for fuel.

Brent gained $0.42 to $82.62 a barrel, while US crude rose $0.47 to $78.76 per barrel.

Reuters