Yen hits three-week high as Gulf attacks and AI jitters spark risk-off

The yen climbed to a three-week high as fresh attacks on Gulf shipping and renewed doubts over the AI stock rally pushed traders toward safe havens. Investing.com reports that the dollar wobbled ahead of a busy run of central bank meetings, while US Treasury yields dropped to one-month lows on safe-haven flows, according to the same publisher.

What moved and why

Oil risk is back at the centre. According to investingLive, Iran's IRGC claims four vessels were hit and caught fire in the northern Gulf, and three other vessels were reportedly struck by mines west of the Strait of Hormuz overnight. investingLive's European session wrap says oil rose as hopes for a deal faded amid growing prospects of another US attack on Iran.

Equities added to the mood. The same wrap says US futures tumbled as the AI rally faced fresh scrutiny despite solid Meta earnings, and gold fell below $4,100. investingLive's Asia-Pacific report described Asian stocks sliding and the dollar slipping. Crypto felt it too: our sister site covered how bitcoin fell toward $81,700 in the AI selloff and oil surge.

The ECB reference rates of 22 October capture the shift. USD/JPY fixed at 157.05, down 0.53% from 157.88 on 21 October. EUR/USD fixed at 1.1205, down 0.26%. The biggest move came in USD/MXN, which fixed at 18.761, up 1.51%, as the peso weakened in the risk-off tone. Track the yen on the USD/JPY chart.

Euro under pressure, pound holds up

French political strain remains a drag on the euro. investingLive notes that EUR/CHF fell to three-month lows as French bond turmoil weighed. Investing.com reports the pound edged higher and outperformed as investor nerves rattled euro zone markets, and separately that sterling gained on a US tech drag. GBP/USD still fixed at 1.3376, down 0.19% from the prior day's 1.3402.

French data offered a small offset. According to investingLive, October business confidence rose to 97 against 96 expected, but stayed below its long-term average of 100.

Central banks and data in the news

• Bank of Japan: Most analysts now expect the next BoJ hike in December and none see an October move, investingLive reports, citing Bloomberg.
• Bank of Korea: It held its rate at 3% after back-to-back hikes and kept the door open to a November move, per investingLive.
• PBOC: The USD/CNY reference rate was set at 6.7195, according to investingLive.
• Bank of Canada: Canada's September PPI rose 2.0% m/m against 1.3% prior, and 14.5% y/y, investingLive reports. It says markets price an 80% chance of a BoC hike on October 28. USD/CAD fixed at 1.4034.
• US labour market: Initial jobless claims came in at 194,000 against a 200,000 estimate, while continuing claims rose to 1.728 million versus 1.720 million expected, per investingLive.
• RBNZ: After Q3 CPI eased to 3.7%, investingLive says markets still price an October 28 hike as near certain. NZD/USD fixed at 0.5681.

What to watch next

1. SNB minutes and UK CBI data. investingLive's daily calendar lists both as the main European releases and expects a muted reaction.
2. Gulf shipping and US-Iran headlines. These are driving oil and safe-haven demand for the yen and Treasuries.
3. AI stocks. Further pressure on tech could keep risk sentiment fragile, based on the moves investingLive describes.
4. October 28 decisions. Both the Bank of Canada and the RBNZ meet that day, with hikes priced at 80% and near certain respectively, according to investingLive.

For the euro side of the story, see the EUR/USD chart.