Yen gains favor as Nasdaq rout spreads, dollar flat before payrolls

A deep sell-off in US technology stocks set the tone for currencies late on Thursday, with the yen drawing safe-haven demand while the dollar held flat. The Nasdaq 100 fell 6.36%, its worst day since 2020, as AI-linked selling spread, according to investingLive's Americas wrap.

What moved and why

Our last recap covered the Bank of England's hike to 4% and the steady dollar after strong jobless claims. The story has since shifted to risk appetite. Investing.com reported that the dollar was flat as the Wall Street rout lifted the safe-haven yen, with sterling still in focus after the BoE decision.

Oil moved the other way. WTI crude settled at $90.52, up 2.72%, as buyers defended support, investingLive reports. Investing.com described the dollar as little changed as oil bounced and traders eyed payrolls.

The midterm results still shape the backdrop. investingLive noted that 40 of 41 local votes on data center curbs were on track to pass, and argued the market is comfortable with a slower data center buildout. Its chief currency analyst Adam Button told Reuters that Trump "can double down on unpopular trade wars or he can listen to the electorate and change course," investingLive reports.

The risk-off mood also hit crypto, as our sister site covered in Bitcoin's slide below $76,000 after the stock rout.

The majors

The latest ECB reference rates are from Thursday, 5 November. They were set during European trading, so they do not capture the full US session sell-off.

The dollar firmed across most majors in Thursday's fixing, reversing part of the 4 November drop. Over five fixings, EUR/USD is still up 0.84% and GBP/USD up 1.07%. USD/JPY at 158.46 was the highest of the last five fixings, which predates the yen bid that Investing.com described later in the day. Charts: USD/JPY and the dollar index.

Bank views

Several banks published currency calls on Thursday, according to Investing.com:

• Citi sees the dollar weakening against the yen after the midterms.
• HSBC sees Democratic midterm strength weighing on the dollar in the near term.
• Goldman Sachs named an FX trade it sees as the best hedge for the AI drawdown, and separately flagged a USD/CNH entry opportunity on a policy move.

In Asia, Investing.com reports that Chinese firms' profit margins trail global peers as domestic demand stays weak.

Central banks and data

US third-quarter productivity rose 3.6% against 2.8% expected, while unit labor costs fell 0.7% against a forecast 0.6% rise, investingLive reports. It noted the figures look disinflationary but are volatile and largely ignored by policymakers.

On the Fed, investingLive's European wrap carried an analysis titled "What Could Stop the Fed Raising Rates in December?", a sign that a hike remains part of the debate. At the ECB, Isabel Schnabel gave a speech titled "Navigating stormy waters: reflections on monetary policy". The pack does not include its content.

What to watch next

1. US October payrolls. investingLive's preview says the October numbers "show a skew". The data is the next test for the dollar.
2. Equity stability. Whether the AI-led sell-off extends will shape demand for the yen.
3. Trump's trade signals. investingLive says markets are waiting to see if the White House changes course on tariffs after the midterms.
4. Fed December path. Any Fed commentary on a December hike.