The Japanese yen strengthened to 157.83 per dollar on Thursday as a tech-stock sell-off on Wall Street pushed traders toward safe havens. The Bank of Japan's hawkish September minutes added support, while the Bank of England raised rates for the first time in more than three years.
The Japanese yen strengthened to 157.83 per dollar on Thursday as a Wall Street sell-off drove traders toward safe-haven assets. The U.S. dollar index, which tracks the greenback against six major peers, was little changed at 101.58 at 16:00 ET (21:00 GMT).
Democratic sweep sparks tech sell-off
Concerns about tighter regulation of the artificial intelligence industry after the Democratic victory in the U.S. midterm elections led traders to dump technology stocks and buy Treasury bonds and the yen. With Democrats in control of both chambers of Congress, the party could pursue greater AI regulation and try to slow the spread of data centers.
Interactive Brokers senior economist José Torres described the sell-off. According to Investing.com, he said markets turned from rally to rout: "it’s a total bloodbath here on Wall Street"
U.S. labor data was solid. Initial jobless claims for the week ending October 31 fell 6k to 189k, and Challenger, Gray & Christmas reported 43,994 U.S. layoffs in October, the lowest for that month since 2023. Friday's nonfarm payrolls will likely factor into the Federal Reserve's plans, and the central bank is expected to hike rates in December.
Bank of Japan minutes lend the yen support
The minutes of the Bank of Japan's September meeting revealed a hawkish tone. Japan's policy rate sits at a 31-year high of 1.25%, and several board members saw clear room to accelerate the pace of hikes.
Bank of England hikes for the first time in over three years
The Bank of England's Monetary Policy Committee raised its key rate by 25 basis points in an 8-1 vote, with the lone dissenter calling for a half-point hike. Sterling shed 0.2% to $1.3448, and the euro slipped 0.1% to $1.1217, moves largely tied to the Wall Street rout.
Deutsche Bank chief UK economist Sanjay Raja does not think the hike starts a long cycle, citing financial conditions that have tightened materially since March.
Source: Investing.com
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