Japanese Yen Hits One-Year High Against Euro Amid Fiscal Fears

The Japanese yen reached its strongest level in over a month on October 23, hitting a one-year high against the euro as investors pivoted toward safe-haven assets. This shift was driven by growing skepticism regarding the sustainability of the artificial intelligence spending boom and acute concerns over the budget deficit and debt burden of France. These fiscal worries triggered a selloff in French bonds, pushing the euro down to 175.20 yen in early Asian trade.

Market volatility was further compounded by Houthi attacks in Saudi Arabia, which drove Brent crude futures above $114 per barrel. The resulting energy price spikes increased the appeal of the Canadian dollar and Norwegian crown while raising fears that higher costs would hinder global economic growth and consumption.

In Japan, the case for a potential interest rate hike strengthened after annual core consumer inflation, excluding fresh food, rose 2.1% in September—exceeding the 2% target for the first time in nine months. Simultaneously, the U.S. dollar fell to a nearly three-week low and U.S. 10-year Treasury yields dropped toward a one-month low of 4.953% as risk aversion grew.