Today's Edition
SHANGHAI/SINGAPORE (Reuters)
The US dollar held firm against major currencies on Friday, drawing support from haven demand after a selloff in AI stocks worldwide, though lower Treasury yields capped gains ahead of a closely watched US payrolls report.
Currencies are swaying to the tune of the share and bond markets, analysts said, as investors take stock of the Democrats' victory in the US midterm elections and what that means for the AI trade, tariffs and the Iran war.
Asia's tech-heavy markets crumbled on Friday following the steepest decline in US stocks since April 2025 on fear of tighter scrutiny of the AI industry, particularly around data centre construction.
The overnight flight to safety drove the two-year US Treasury yield, which is sensitive to interest rate expectations, down about 10 bps to its lowest since September 10. The 10-year yield fell nearly 6 bps, steepening the yield curve.
By the Asian afternoon, yields rebounded with the 10-year up 2 bps at 4.8531%, while the two-year rose 1 bp to 4.4873%.
Weaker Asian equities are indirectly supportive of the dollar against Asian currencies, he said.
DEMAND FOR SAFETY
The equity rout prompted investors to seek shelter in haven currencies. The Japanese yen hit a one-week high of 157.27 a dollar before paring gains by midday at 157.8.
The yield on the 10-year Japanese government bond fell 9 bps to 2.665%, its lowest since June 30. The yield on China's 10-year sovereign bond also fell to near a record low.
The euro was down 0.2% against the dollar at $1.1198, but poised for a 0.4% rise for the week, ending two weeks of loss. The dollar index, which measures the greenback against six peers, was up 0.3% at 101.74.
The sterling was last down 0.1% at $1.3433 after the Bank of England raised its policy interest rate as widely expected. The currency is on track to end the week 0.3% higher, for the fourth week of gain.
The Swiss Franc was roughly flat against the dollar.
NON-FARM PAYROLLS
Next on the agenda is Friday's US non-farm payrolls report from which investors will try and gauge the Federal Reserve's interest rate path.
Data on Thursday offered an upbeat prelude, with weekly initial jobless claims falling by 6,000 to a seasonally adjusted 189,000, matching a 57-year low in July and below the 196,000 estimate in a Reuters poll of economists.
