Yen jumps as traders seek safety amid global flight from risk
Yen jumps 0.8% as weak tech earnings and Middle East tensions drive global risk-off, boosting safe havens; dollar slips, euro falls.
- The yen rose 0.8% to 156.86 per US dollar as weak tech and AI earnings, plus Middle East tensions, pushed investors towards safe havens.
- Treasuries jumped, the dollar slipped, and the Swiss franc also gained. The euro fell as French debt stress and higher energy prices hurt sentiment.
- Options traders grew more positive on the yen, but analysts said central bank meetings and US elections may stop a lasting rally.
The yen surged, outperforming all its major counterparts on Oct 22, as a selloff in global equities boosted demand for havens.
The Japanese currency rose 0.8% to 156.86 per US dollar and touched its strongest level since late September. It gained 0.9% against the euro.
A fresh round of disappointing technology and artificial intelligence-related earnings weighed on risk sentiment, along with escalating Middle East tensions, which boosted oil prices. Treasuries soared and the dollar edged lower.
“Given that AI risk is US-centric, AI jitters have driven US yields lower, which in turn may have led to lower USD/JPY,” OCBC FX strategist Sim Moh Siong said.
Other haven currencies also fared well. The Swiss franc gained 0.4% against the dollar. Meanwhile, the euro was marginally lower in the US afternoon as intensifying French debt stress together with elevated energy prices weighed on the common currency.
“Foreign-currency markets are reflecting traditional risk-off patterns, with the yen and Swiss franc outperforming, amid underperformance by the euro,” said Alex Cohen, a strategist at Bank of America.
Options traders have also turned more optimistic on the yen as reflected in one-month dollar-yen risk reversals. The shift suggests investors are increasingly positioning for near-term yen gains, even as strategists debate whether the recent strength is being driven primarily by risk aversion or emerging domestic flow support.
Still, analysts cautioned against reading too much into the move.
“With central bank meetings coming up next week and the midterm elections further ahead, I do not currently expect this to develop into a sustained yen appreciation trend,” said Hirofumi Suzuki, chief FX strategist at Sumitomo Mitsui Banking. BLOOMBERG
Source: The Straits Times https://www.straitstimes.com/business/yen-jumps-as-traders-seek-safety-amid-global-flight-from-risk?ref=latest-headlines
