Risk-Off Sentiment Boosts Yen and Dollar as Tech Selloff Hits Global Markets

The Japanese yen and U.S. dollar gained on Wednesday as investors flocked to safe-haven assets following a steep tech-driven selloff on Wall Street that rippled across Asian markets. The Australian and New Zealand dollars weakened further, reflecting growing risk aversion and regional economic pressures.

The risk-sensitive Aussie slipped 0.2% to $0.6476, while the New Zealand dollar fell 0.1% to $0.5635, hovering near a seven-month low after unemployment rose to its highest level since 2016. The kiwi also languished at a 12-year low against the Aussie at NZ$1.1512. Sterling traded near a seven-month low at $1.3016 after British Finance Minister Rachel Reeves hinted at broad tax increases in her upcoming budget, intensifying pressure on the pound.

“Risk-off sentiment has been pervasive across markets,” said Ray Attrill, Head of FX Research at NAB, noting that the U.S. dollar strengthened against most major currencies except the yen. He added that investors are also responding to signals of fiscal tightening in the U.K.

Asian stock markets mirrored Wall Street’s losses, with Japan’s Nikkei down 2.4% and South Korea’s KOSPI plunging 4.8%. The U.S. dollar index held steady at 100.18 after reaching its highest level since August 1. Market sentiment was also dampened by a prolonged U.S. government shutdown that has disrupted key economic data releases, placing greater focus on the upcoming ADP payroll report.

The yen rose 0.2% to 153.42 per dollar, extending Tuesday’s 0.7% gain, while the euro steadied at $1.1483. Analysts noted that the Reserve Bank of Australia’s decision to hold rates steady signaled a cautious stance, keeping the Aussie under pressure.

Meanwhile, Bitcoin traded flat near $100,317 after plunging 6.1% on Tuesday, its sharpest one-day drop since June, reflecting broader investor unease across global markets.