The dollar posts its best weekly performance, while the yen awaits Japan's elections
The US dollar surged to near a two-week high on Friday, putting it on track for its strongest weekly performance this month. This strong rally in the greenback was fueled by a wave of risk aversion in global stock markets, where concerns about the scale of spending on artificial intelligence technologies have unsettled investors, prompting them to seek refuge in the dollar as a safe haven.
Performance of the dollar index and major currencies
The dollar index, which measures the performance of the US currency against a basket of six major rivals, reached 97.961 , hovering near its highest level since January 23. Data indicates the index is on track for a 1% weekly gain, its largest weekly increase since mid-November. This performance reflects the strength of the US economy compared to its peers and the continued appeal of the dollar during times of economic uncertainty.
The Japanese yen and a crucial election
In contrast, the Japanese yen saw positive movement, rising to 156.74 . All eyes are on Japan as it prepares for crucial national elections this Sunday. These elections are of particular importance to investors, as their outcome could lead to changes in the monetary and fiscal policies of the world's third-largest economy, directly impacting the yen's movements in global markets.
The euro stabilizes while the pound weakens
In Europe, the euro remained stable at $1.1784 . This stability followed the European Central Bank's decision yesterday (Thursday) to keep interest rates unchanged, a move widely anticipated in the markets. The ECB downplayed the impact of current dollar volatility on its future decisions, emphasizing its focus on eurozone economic data and inflation rates.
The British pound suffered sharp losses, settling at $1.3520 after falling by about 1% in the previous session. This decline reflects the pressures facing the British currency amid current economic challenges and the dominant strength of the US dollar.
The economic context and the impact of artificial intelligence
Economic analysts link the recent rise of the dollar to the stock market decline, which stemmed from concerns that major technology companies are overspending on artificial intelligence infrastructure without clear, immediate returns. These concerns have prompted capital to flow out of high-risk assets (stocks) and into the safe haven of the US dollar, reinforcing its status as a global reserve currency during times of turmoil.
