Dollar falls with yields as AI spending fears hit tech stocks

The dollar fell on Friday as fears about AI spending hit tech stocks and pushed investors into government bonds. investingLive's European session wrap said the dollar dropped alongside Treasury yields and gold, as equity losses mounted.

The move adds a new driver to the euro's gains after Thursday night's report on a possible ECB hike in December. This time the push came from risk sentiment and bonds, not central-bank headlines.

A bond rally, not a policy story

Investing.com reports that US Treasuries surged to wrap October in their biggest rally since 2024. A separate Investing.com piece said the dollar softened as the tech selloff spurred bond bids, with the euro and yen steady.

Gold did not act as a haven. According to investingLive, gold was hit again by forced liquidations as equity losses grew. Risk appetite was also weak in crypto, where a suspected Binance hack dragged bitcoin and other tokens lower.

Not everyone sees AI as a dollar negative. Investing.com carries a note on why Deutsche Bank says the "AI dollar" is here.

Reference point: the ECB fixings

The ECB reference rates of 30 October show the dollar weaker against most majors versus the 29 October fixing:

• EUR/USD fixed at 1.1172, up 0.38% from 1.1130.
• GBP/USD fixed at 1.3399, up 0.62%.
• USD/JPY fixed at 157.25, down 0.51%.
• USD/CHF fixed at 0.8229, down 0.68%.
• USD/MXN went the other way, fixing at 18.908, up 0.86%.

These are official daily fixings, not live quotes. Track the broad dollar on the DXY chart.

Sterling extends its run

Investing.com says the pound firmed as the dollar slipped on midterm and AI jitters. UBS sees scope for further sterling gains because short positioning creates upside, according to Investing.com. In another note, UBS said Bank of England rate hikes should support the pound against the franc. See GBP/USD.

Eurozone data: growth beats, inflation bites

investingLive reports that eurozone Q3 GDP rose 0.4% q/q against 0.2% expected, and 1.3% y/y against 1.1% expected. The outlet flagged "a catch or two" in the details.

Country data were mixed:

• Germany grew 0.2% q/q versus 0.1% expected, though investingLive said the details point to a loss of momentum.
• Italy stalled at 0.0% q/q versus 0.1% expected.

Inflation was the bigger surprise. Italy's October CPI jumped to 5.4% y/y against 4.6% expected, with HICP at 5.6%. investingLive said energy drove most of the rise, with regulated energy inflation surging to 59.5% from 25.8%. By contrast, German state inflation cooled, with Bavaria at 2.8% from 3.2%, the outlet reported.

Yen and BoJ

According to investingLive, BoJ governor Ueda said the bank will stick to its rate hike path in response to the latest macro developments. He also played down any declaration of victory over inflation, saying it is up to the government to make that call.

North America

The US Employment Cost Index rose 0.8% in Q3, in line with forecasts, investingLive reports. Wages slowed to 0.7% from 0.9%. Canada's August GDP was flat against a 0.2% estimate, with a September advance estimate of -0.1%. USD/CAD still fixed lower at 1.3969.

What to watch next

• Whether the AI-driven tech selloff and bond rally extend into month-end, as flagged by investingLive and Investing.com.
• The ECB's December debate, now framed by hot Italian inflation and cooler German state readings.
• The BoJ's hike path after Ueda's comments.
• Bank of England hike expectations, which UBS links to sterling support.
• US midterm jitters, cited by Investing.com as a dollar factor.