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The U.S. dollar touched a two-decade high against rivals on Thursday, as Wall Street rallied and European shares rose from six-week lows with strong earnings reports offseting gloomy U.S. economic data.

The yen dropped to a 20-year low after the Bank of Japan vowed to buy unlimited amounts of 10-year bonds daily to defend its yield target. The bank’s strengthening of its commitment to ultra-low interest rates sent the U.S. dollar to a fresh high, weakened emerging market currencies and pushed borrowing costs for U.S. dollars in currency derivatives markets sharply higher.

Oil prices settled higher on the increased likelihood that Germany will join other European Union member states in an embargo on Russian oil, which could further tighten supplies in the already-stressed global crude market.

The S&P 500 climbed 2.47% to end the session at 4,287.50 points. The Nasdaq gained 3.06% to 12,871.53 points, while Dow Jones Industrial Average rose 1.85% to 33,916.39 points.

Technology stocks gained on strong earnings. Shares of Facebook parent Meta Platforms Inc (FB) surged after the company reported a larger-than-expected profit on Wednesday.

Apple Inc (AAPL.O), the world’s most valuable company, and e-commerce giant Amazon.com Inc (AMZN) both rallied ahead of their quarterly reports, though Amazon tumbled about 10% in extended trade after the company forecast current-quarter sales below estimates.

The tech sector gains supported Wall Street even after the U.S. Commerce Department said in its advance GDP estimate that gross domestic product fell at a 1.4% annualized rate last quarter.

“Huge miss on GDP this morning, but just looking at headline is misleading,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.

“Trade, inventories and government spending all dragged, but the consumer held up and business investment was strong. The shift to services spending bodes well for inflation moving forward, and core PCE came in a bit light. The big headline miss also gives the Fed some breathing room.”

The MSCI world equity index rose 12.07 points, or 1.85%, to 665.97.

European stocks gained on solid corporate earnings. The pan-European STOXX 600 closed up 0.6% but was below session highs, hit by weak advance first-quarter U.S. economic growth data as well as higher-than-expected German inflation spurring bets on a quicker pace of monetary tightening by the European Central Bank.

Indexes in Frankfurt (GDAXI) and Paris (FCHI) both rose.

London-listed bank Standard Chartered (STAN) jumped 14% after upbeat quarterly earnings. Its Hong Kong-listed shares had earlier gained more than 10%.

“Markets were quite fearful at the start of the earnings season but Meta’s earnings last night seems to have calmed sentiment,” said Kaspar Hense, senior portfolio manager at Bluebay Asset Management in London. “It looks like we have turned a corner for the outlook for U.S. stocks and that should provide some relief to investors watching the dollar’s rise.”

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.03%.

The BoJ’s move was in stark contrast with investors’ conviction that U.S. interest rates are about to start going up quickly and it jolted the dollar higher.

“The message from the monetary policy statement this morning is that the Bank of Japan refuses to budge, sticking with its unlimited bond buying plan to defend the 0.25% 10-year yield target,” said Arne Petimezas, senior analyst at AFS Group.

The euro hit a five-year low against the dollar of $1.04695 before paring losses. It was still on track for its worst monthly performance since January 2015.

The euro’s drop to its lowest level since 2017 is rekindling the possibility it will reach parity against the dollar for the first time in two decades, as fears of a euro zone recession encourage investors to pile on the bearish bets.

The weaker yen and euro pushed the dollar index to 103.930 , its highest level since December 2002.

Euro/dollar at 5-year lows, dollar/yen at 2-decade highs

Japan’s Nikkei (N225) rose 1.75%, its best day in two weeks, as investors cheered the weaker currency that helps Japanese exporters.

Benchmark 10-year Treasury yields rose to near their highest levels of the year on Thursday after signs of strength in the U.S. job market outweighed an unexpected decline in economic growth in the first quarter.

A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 180,000 for the week ended April 23, suggesting that the U.S. economy is putting the Omicron wave of the coronavirus behind it.

Investors expect that U.S. rates are rising and that next week’s Federal Reserve meeting will bring the first of several consecutive 50-basis-point hikes.

Brent crude futures rose $2.27 to settle at $107.59 a barrel while U.S. West Texas Intermediate crude rose $3.34, or 3.3% to $105.36.

Germany hopes to find a way within days to replace Russian oil with supplies from other sources, Economy Minister Robert Habeck said on Tuesday, adding that Germany could then cope with an EU embargo on Russian oil imports.

Germany is heavily reliant on Russian energy imports and had previously opposed a full ban.

Spot gold prices were up 0.49% by 4:26 p.m. EDT (2026 GMT), rising from a ten-week low touched earlier in the session under pressure from the stronger U.S. dollar. U.S. gold futures settled up 0.1% at $1,891.30.

The dollar hit a 20-year high against rivals on Thursday as the Bank of Japan doubled down on its dovish policy, sending the yen to its weakest level since 2002, while the euro hit a five-year low on growth concerns for the region.

The dollar shot past the key level of 130 yen after the BOJ strengthened its commitment to keep interest rates ultra-low by vowing to buy unlimited amounts of bonds daily to defend its yield target.

“The BoJ gave the ‘all clear’ to continue selling the yen,” said Lee Hardman, a currency analyst at MUFG Bank in London.

There had been some market speculation the BOJ might step back a little given the pressure building across foreign exchange markets.

A finance ministry official responded that Japan will take appropriate action in currency markets, calling recent moves “extremely worrying.”

The yen was last at 130.90, after reaching 131.25, the weakest since April 2002.

The weak yen helped to catapult the dollar to its highest level since December 2002 against a basket of currencies. The greenback has benefited from expectations the Federal Reserve will hike rates faster than peers, which would likely expand the yield gap between U.S. and Japanese government bonds (JGBs).

“This move in dollar/yen has been primarily due to long-end spread widening between U.S. Treasuries and JGBs,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.

The dollar index was last at 103.62, up 0.62% on the day, after reaching as high as 103.93.

The Fed is expected to raise rates by 50 basis points when it concludes its two-day meeting on Wednesday. Aggressive increases are likely to follow at subsequent meetings, with fed fund futures traders pricing for the Fed’s benchmark rate to rise to 2.73% by year-end, from 0.33% now. ,

The greenback pared gains after data showed U.S. economic growth unexpectedly contracted in the first quarter as a resurgence in COVID-19 cases disrupted activity.

Rai said, however, that the data did not necessarily reflect a weak economy, but was unduly impacted by a sharply wider trade deficit, which was due to surging imports.

“If you actually peel that away and look at the underlying consumption and investment trends, both of those still look reasonably healthy,” Rai said.

The euro dropped below the key psychological level of $1.05 as investors remained nervous about Russia cutting off gas to parts of the region for refusing to pay in roubles.

The European Commission on Thursday warned buyers of Russian gas they could breach sanctions if they converted gas payments into roubles, as officials struggled to clarify the EU’s stance on Moscow’s payments scheme, which has sowed confusion in the bloc.

The euro was last $1.0505, after earlier reaching$1.0470, the lowest since Jan. 2017.

Euro/dollar at 5-year lows, dollar/yen at 2-decade highs

Sterling also succumbed to dollar strength on Thursday, tumbling to a 21-month low of $1.2412.

Bitcoin gained 2.04% to $40,058 and ether rose 2.69% to $2,698.

(By  Karen Brettell. Additional reporting by Julien Ponthus in London; Editing by Toby Chopra and Richard Chang)

NEW YORK, April 28 (Reuters) – Oil settled higher on Thursday on the increased likelihood that Germany will join other European Union member states in an embargo on Russian oil, which could further tighten supplies in the already stressed global crude market.

Traders were reacting to media reports of comments on Tuesday from German Economy Minister Robert Habeck, who said the EU’s largest economy could cope with an EU embargo on Russian oil imports and Germany hoped to find ways to replace Russian oil with other supply.

“The apparent decision by Germany to remove its opposition to a Russian oil sanction would appear to go a long way in an overall EU ban that would further reduce Russian oil availability in a global market,” said Jim Ritterbusch, president of Ritterbusch and Associate in Galena, Illinois.

Brent crude futures rose USD2.27 to settle at USD107.59 a barrel while U.S. West Texas Intermediate crude rose USD3.34, or 3.3% to USD105.36.

Germany relies heavily on Russian energy imports and had opposed a full ban.

Before the war in Ukraine, Russian oil accounted for about a third of Germany’s supply. A month ago, Habeck said the country had reduced its dependence on Russian oil to 25% of imports.

“As a result of this, oil from the free world is going to be more expensive, and Iron Curtain oil will plunge further in value and be discounted more heavily,” said John Kilduff, partner at Again Capital LLC in New York.

Moscow has started to use energy exports as a cudgel following the response by the United States and allies over Russia’s invasion of Ukraine.

Russia has cut off gas supply to Poland and Bulgaria and is trying to push the EU to adopt its new gas payments system that involves opening accounts at Gazprombank where payments in euros or dollars would be converted into roubles.

Russian oil production could fall by as much as 17% in 2022, according to an economy ministry document seen by Reuters, as the country contends with Western sanctions.

Despite this expected shortfall, the OPEC+ group of producers comprising the Organization of the Petroleum Exporting Countries and allies led by Russia is expected to maintain its modest pace of increasing output when it meets on May 5, sources told Reuters.

The U.S. dollar =USD surged to its highest levels in two decades on Thursday, propelled by weakness in its major rivals, such as the yen and the euro. A stronger dollar is usually bearish for oil prices which are priced in the greenback, as it makes it more expensive to holders of other currencies.

In China, Beijing closed some public spaces and stepped up COVID-19 checks at others as most of the city’s 22 million residents embarked on more mass testing in an effort to avert a Shanghai-like lockdown. The most recent lockdown has disrupted factories and supply chains, raising fears over the country’s economic growth.

But Asia’s biggest oil refiner, Sinopec Corp, expects the country’s demand for refined oil products to recover in the second quarter as COVID-19 outbreaks are gradually brought under control.

A slowdown in global growth owing to higher commodity prices and an escalation in the Russia-Ukraine conflict could further exacerbate oil demand fears.

(By Laura Sanicola, additional reporting by Ahmad Ghaddar and Mohi Narayan in Singapore. Editing by David Goodman, Susan Fenton, David Gregorio and Sandra Maler)