Yen shines as AI jitters spur safe-haven rush
Currency moves were driven by doubts over AI spending, with Brent crude futures above US$110 as growth concerns outweighed inflation worries.
The Japanese yen surged to its strongest level in over a month on Friday, driven by safe-haven flows amid heightened risk aversion. This followed concerns over the rapid growth of artificial intelligence spending, which prompted a downturn in US Treasury yields and a slide in the dollar to near a three-week low. The move reflected the belief that economic growth concerns outweighed inflation worries.
The yen rose 0.3% to 156.28 per dollar, setting it up for a 1% weekly gain, its strongest weekly increase since early September. Meanwhile, the dollar index slipped to 101.52, its lowest point since the start of the month, following a drop to 101.44 on Thursday. US 10-year Treasury yields dipped to a one-month low of 4.953%, as investors sought the relative safety of sovereign debt amidst mounting doubts about the AI boom's sustainability and potential burnout.
Analysts at ING noted that while the risk-off environment could temporarily delay the Federal Reserve's next rate hike, they don't anticipate a prolonged stay below 5% for the 10-year yield due to persistent inflation, fiscal deficits, and AI trends. Meanwhile, other currencies reacted to distinct risk factors. The Canadian dollar benefited from Middle East tensions, while the Swiss franc remained steady amid fiscal stress in France, and the Chinese yuan held firm as concerns lingered over debt in euro-area nations. The Australian and New Zealand dollars were relatively stable.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
