Dollar ends four-week win streak as AI debt fears push yields lower

The dollar closed the week lower, ending a four-week winning streak, as worries about AI-related debt sent investors into safe-haven Treasuries. Investing.com reports the slide helped the euro halt a five-week losing run.

The afternoon added a risk-off layer. According to the investingLive Americas wrap, the Nasdaq fell 2.3% and the S&P 500 lost 1.2%, while WTI crude rose $3.40 to $101.37. US 10-year yields slipped 2 basis points to 5.09%. The same wrap says the New Zealand dollar led the majors and the US dollar lagged.

What moved and why

The bond market was again the main story. Investing.com says US yields fell for the week as AI debt jitters drove buyers into government bonds. That came despite a run of hot US inflation data earlier in the week, which our morning coverage tracked.

Fresh US data did not change the picture. investingLive reports September industrial production rose 0.7% against 0.4% expected, though it notes the headline was flattered by a 3.5% jump in utilities. Manufacturing output rose 0.3%, in line with forecasts. Capacity utilization came in at 76.9%.

Fiscal news added to the debt theme. investingLive reports the US fiscal 2026 budget deficit reached $1.992 trillion, the largest in five years. Gross interest on the debt hit a record $1.36 trillion, and the outlet says interest is now the main driver of the deficit.

For how the oil spike and equity slide hit other assets, see our sister site's report on bitcoin slipping as the oil surge hit stocks.

The majors

ECB reference rates from the 2026-10-16 fixing, compared with the 2026-10-15 fixing and with five fixings earlier (2026-10-09). These are official daily fixings, not live quotes.

The kiwi posted the biggest daily gain in the fixings. The Swiss franc also firmed sharply against the dollar. The yen was the exception, with USD/JPY barely changed on the day. Chart EUR/USD and the dollar index on TradingView.

Sterling was set to snap a seven-week losing run as the dollar slipped on AI fears, Investing.com reports. The Canadian dollar was heading for a weekly gain, but CIBC warned of inflation risks as the "leaky loonie" faces a further slide, according to Investing.com.

In Europe, the Swiss finance minister warned that steep European debt could trigger a euro crisis, Investing.com reports. On the euro outlook, BofA forecasts EUR/USD at 1.15 by year-end and 1.20 by end-2027, according to Investing.com.

Central banks in the news

• Bank of Japan: Governor Ueda said the bank will continue to raise rates as underlying inflation approaches 2%, per the investingLive Americas wrap.
• Federal Reserve: Warsh would not prejudge the rest of 2026 and named October and December as decision points, investingLive reports.
• Bank of England: Bailey said UK second-round inflation effects are subdued so far but it is too early to judge, according to the same investingLive report.
• ECB: investingLive's daily preview says the ECB is expected to keep rates steady at its upcoming meeting, citing a lack of clear second-round effects and recent bond market woes.

What to watch next

• Whether the Treasury rally holds, given the AI debt worries Investing.com flagged.
• The Fed's October decision point, which Warsh named alongside December.
• The ECB's upcoming meeting, where investingLive says a hold is expected.
• Follow-through on Ueda's signal of further BoJ hikes, with USD/JPY still near 158 in the fixings.
• Oil, after WTI's jump above $101.