The Japanese yen reached its highest level in over a month on Friday, driven by a surge in safe-haven demand amid growing concerns about the sustainability of the AI spending boom. This risk aversion also pushed U.S. Treasury yields lower, weakening the dollar to a nearly three-week low. The yen strengthened by 0.3% to 156.28 per dollar, marking its best weekly performance since early September.
Brent crude futures climbed above $114 per barrel, extending a 4% gain from the previous session after Houthi attacks in Saudi Arabia raised fears of further disruptions to energy supplies. Despite this, economic growth worries overshadowed inflation concerns, benefiting safe-haven assets like the yen and U.S. Treasuries.
Analysts from ING noted that while the current risk-off environment reduces pressure on the Federal Reserve to raise interest rates next week, they still expect the 10-year Treasury yield to rebound above 5% due to inflation, fiscal deficits, and AI trends. The dollar index fell to 101.52, after hitting a monthly low of 101.44 on Thursday.
Other currencies also saw movements based on specific risks. The Canadian dollar and Norwegian crown strengthened due to rising oil prices, while the Swiss franc benefited from French fiscal stress. The euro remained flat at $1.122, weighed down by concerns over France's debt burden and other heavily indebted euro-area countries.