The yen headed for its strongest daily gain in almost a month as investors sought safety. Elevated oil prices, doubts over AI returns and worries about France weighed on markets. The dollar still rose against the euro.
The yen was on track for its strongest daily gain in almost a month on Thursday, as investors sought safe haven assets amid fragile equity markets, elevated crude prices from the drawn-out war in the Middle East, and doubts over future returns from artificial intelligence.
The Japanese yen strengthened 0.75% to 156.96 per dollar. Against the Swiss franc, another traditional safe haven, the dollar weakened 0.42% to 0.821 francs per dollar.
Intervention worries lift the yen
Some of the yen's move may also be due to its approaching the key 160 level, which is seen as increasing the odds of further intervention by Japanese authorities to shore up the currency. Kevin Ford, lead FX and macro strategist at Convera, called it "the intervention premium".
Oil also played a part. Oil prices climbed about 3% to a five-month high after Houthi attacks in Saudi Arabia stoked concerns of further disruption to energy supplies from the key exporting region.
France outweighs AI fears for the dollar
The dollar, however, rose against the euro. Worries about social unrest in France and a worsening fiscal outlook for the country outweighed concerns about the AI trade, which pushed US stocks lower.
The dollar index fell 0.08% to 101.60, with the euro down 0.09% at $1.1222. Erik Nelson, global head of FX strategy at Wells Fargo, said that as long as France is more of a concern than US AI credits, the euro should underperform.
Concerns about France's ability to manage its huge debt burden have hurt French government bonds. The spread between France and Germany's 10-year note yields reached 177.7 basis points on Thursday, the widest gap since 2011.
Elsewhere, sterling strengthened 0.05% to $1.3401, while bitcoin fell 4.27% to $81,023.
Source: Reuters via Investing.com
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