Dollar on track for first weekly fall in over a month as AI selloff shifts focus

The US dollar was on track for its first weekly decline in more than a month against the euro and the yen on Friday, 16 October, as investors assessed the impact of this week’s AI-related stock selloff and the Federal Reserve rate outlook, Reuters reported.

Currency moves

• The dollar index, which measures the greenback against six major peers, fell 0.35% to 101.70 and was set for a 0.55% weekly decline.
• The euro was up 0.33% at $1.1258 after climbing 0.56% on Thursday — its biggest daily rise in two months — and was on track for a 0.51% weekly gain.
• The yen was on track for a 0.24% weekly rise after four consecutive weekly declines; it was last up 0.05% at 157.89 per dollar.
• The Swiss franc looked set for the largest weekly gain versus the dollar, about 0.85%, after rising over 1.4% in the prior two sessions, Reuters said.

AI stress and the dollar

• AI stocks have fallen sharply this week, with stress spreading to parts of the credit market as investors worry data-centre operators may not turn profitable in time to service debt.
• Analysts said Wednesday’s moves may preview how currencies react to a major AI-driven selloff: the dollar fell instead of attracting classic safe-haven demand.
• Macquarie’s Thierry Wizman said a weaker AI investment outlook “would reduce bond supply and impair US growth,” threatening the dollar and bringing US yields lower.

Fed outlook

• Markets assigned about an 87% probability that the Fed keeps rates unchanged later this month, according to the CME FedWatch Tool cited by Reuters.
• ING’s Chris Turner said that, barring another big leg down in AI stocks, the dollar may consolidate near recent highs until short-end rates break lower.