The U.S. dollar hit its strongest level since December 1986 against the yen, and it was last up 0.7% at 160.697 yen.
On Wednesday, the U.S. dollar reached its highest level against the Japanese yen in nearly 38 years, amid investor speculation that Japanese authorities might intervene to strengthen their currency. Meanwhile, major U.S. stock indexes climbed.
Japan’s top currency diplomat, Masato Kanda, expressed serious concern and high alert about the yen’s rapid decline.
The euro also surged against the yen, rising to 171.79, its highest level since September 1992, and was last up 0.3% at 171.625.
“The market seems to be front-running itself with respect to BOJ (Bank of Japan) policy,” said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey.
The yen has been hammered as investors flocked to dollar-based assets to take advantage of U.S. interest rates, which are 5.25% to 5.5%, much higher than Japanese rates, which have been raised this year to a range of zero to 0.1%.
The dollar index, which measures the greenback against a basket of currencies, gained 0.38% to 106.07, with the euro down 0.34% at $1.0677.
On Wall Street, shares of artificial intelligence chip leader Nvidia ended up 0.2%, and shares of Amazon Inc jumped 3.9%. The S&P 500 consumer discretionary index gained 2% on the day.
The Dow Jones Industrial Average rose 15.64 points, or 0.04%, to 39,127.80, the S&P 500 gained 8.60 points, or 0.16%, to 5,477.90, and the Nasdaq Composite gained 87.50 points, or 0.49%, to 17,805.16.
MSCI’s gauge of stocks across the globe fell 0.04 points to 803.73.
European shares slipped, with investor focus on French elections at the weekend. The STOXX 600 index fell 0.56%.
U.S. President Joe Biden and former President Donald Trump on Thursday head to the first of two debates ahead of their election rematch this November.
Investors also are seeking clues on U.S. inflation and how soon the Federal Reserve may begin to cut interest rates.
Fed officials have urged patience on rate cuts. Fed Governor Michelle Bowman this week reiterated her view that holding the policy rate steady “for some time” would probably be enough to bring inflation under control.
Investors await Friday’s release of the U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure. Economists polled by Reuters expect PCE annual growth to ease to 2.6% in May.
U.S. Treasury yields rose as inflation in other countries picked up. Australian consumer inflation accelerated to a six-month high in May.
The yield on benchmark U.S. 10-year notes rose 9.1 basis points to 4.329%, from 4.238% late on Tuesday.
Brent crude futures climbed 24 cents to settle at $85.25 per barrel. U.S. West Texas Intermediate crude futures gained 7 cents to settle at $80.90 a barrel.
Gold prices slipped to their lowest in more than two weeks. Spot gold was down 0.8%, at $2,301.16 per ounce.
