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The dollar and the euro soared against the yen Thursday after the Bank of Japan unveiled an aggressive spending program to get the flagging economy back on track.
After its first meeting under new governor Haruhiko Kuroda, the BoJ announced a doubling of the money supply and vowed no let-up in the battle against deflation.
"We will carry out quantitative and qualitative monetary easing that is unprecedented in its scale and quality," Kuroda told a packed news conference.
The yen plummeted, with the dollar soaring to 96.33 yen around 2100 GMT from 92.96 yen at the same time Wednesday and the euro jumping to 124.60 yen from 119.43 yen.
"Clearly, the new BoJ leadership has started with a bang, undertaking bolder-than-expected measures at its very first meeting," said John Praveen at Prudential Investments Advisers.
"This suggests a new monetary policy regime in Japan and fuels optimism of an economic recovery, the beginning of the end of deflation, further weakness in the yen... and further equity market gains," Praveen said.
The euro also gained sharply against the dollar, buying $1.2934, up from $1.2845, after a weaker-than-expected report on new US claims for unemployment benefits, an indicator of the pace of layoffs, weighed on the greenback.
The euro was supported by comments by European Central Bank president Mario Draghi after an ECB monetary policy meeting left the key interest rate unchanged, as widely expected, said Kathy Lien of BK Asset Management.
In the post-ECB meeting news conference, Draghi "avoided giving a direct answer on additional easing and investors interpreted this to mean that a rate cut won't come easy," she said.
David Song, currency analyst at DailyFX, warned that the "biggest event risk" upcoming for the forex market was Friday's US jobs and unemployment report.
Market expectations have been dented this week for the US government's March labor report after a series of disappointing data on jobs and the key service sector.
"All the indicators we've had this week related to US employment point to a disappointing monthly labor report," said Charles St-Arnaud of Nomura.
The dollar weakened against the British pound, which fetched $1.5237, up from $1.5134 late Wednesday.
The dollar fell to 0.9396 Swiss francs from 0.9452 francs.