The United States (US) Dollar lingered near a two-week high on Friday as investors unwound risky bets following a deep rout in stocks driven by Artificial Intelligence (AI) spending concerns, while the Yen firmed ahead of a national election on Sunday.
The Dollar has strengthened since President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chairperson last week as markets expect him not to push a lot for rate cuts, easing some worries about central bank independence.
The sharp selloff in technology stocks this week comes as investors fret about the massive spending on AI as well as the cascading impact of fast-advancing AI tools that could upend various sectors.
Charu Chanana, Chief Investment Strategist at Saxo, said investors are suddenly pricing three shocks at once.
“Big Tech capex scrutiny, AI disruption risk in software beyond productivity hype, and a silver driven liquidity, margin flush. This looks like a positioning flush where the same crowded exposures are being de-risked across assets.”
The risk aversion has helped the dollar despite US Treasury yields sliding after economic data pointed to a weaker than expected jobs market ahead of next week’s highly anticipated payrolls report for January.
–Reuters–
