The Japanese yen surged on Thursday, poised for its biggest daily gain in nearly a month, as investors flocked to safe-haven assets amid global market turbulence. Concerns over elevated crude prices due to the ongoing Middle East conflict, uncertainty surrounding artificial intelligence (AI) returns, and social unrest in France drove risk aversion. The US dollar strengthened against the euro, with French fiscal worries overshadowing AI-related market fears, pushing US stocks lower.
Brent crude reached its highest level since May after Houthi attacks in Saudi Arabia heightened fears of further disruptions to oil supplies. The yen rose 0.51% to 157.33 per dollar, while the Swiss franc remained steady at 0.824 per dollar. The dollar index climbed 0.14% to 101.82, with the euro falling 0.3% to $1.1198. Analysts noted that the dollar's movement is increasingly tied to AI-related capital flows and growth expectations.
Chris Scicluna, head of economic research at Daiwa Capital Markets, highlighted the market's nervousness, citing AI, oil, and France as key concerns. Erik Nelson, global head of FX strategy at Wells Fargo, pointed to the competing pressures between US AI credits and French sovereign credit, noting that as long as France remains the bigger concern, the euro will underperform. French President Emmanuel Macron addressed the recent violence, vowing to prevent further unrest.
Concerns over France's debt management have widened the spread between French and German 10-year bond yields to 177.7 basis points, the highest since 2011. Sterling weakened 0.18% to $1.337, and the Australian dollar fell 0.21% to $0.7012. In cryptocurrencies, bitcoin dropped 3.20% to $81,929.