Japanese yen rises as investors seek safe assets amid US tech selloff
Strategists at CIBC and Nomura predict further gains for the yen as concerns grow regarding artificial intelligence investments.
The Japanese yen strengthened by as much as 0.6 per cent against the US dollar to 157.54 on Thursday, according to Mint.
The currency outperformed its Group of 10 peers following a selloff in US technology shares, which was triggered by concerns over artificial intelligence investments after a Democratic sweep in the US midterms.
Sarah Ying, head of foreign-exchange strategy at CIBC, said demand for haven currencies like the yen or franc could rise if the AI trade continues to unwind. Ying projected that the yen could reach 148 against the dollar by the end of 2027.
Dominic Bunning, head of Group of 10 strategy at Nomura, stated his firm remains long on the yen against the dollar. He described it as a consistent trade while equities and yields decline.
Bunning added that the yen might benefit if Japanese money managers move investments from foreign bond markets into local ones as the Bank of Japan (BOJ) raises interest rates. He expects further BOJ hikes to support the currency.
Nathan Thooft, a senior portfolio manager at Manulife Investment Management, noted the yen is benefiting from safe-haven demand during equity volatility. Meanwhile, the US dollar edged higher by 0.1 per cent.
