Dollar slips on AI investment worries as euro edges up despite French unrest

The U.S. dollar slipped on October 20 as doubts about AI investment returned, while the euro edged higher despite unrest in France, Reuters reported. The dollar index fell 0.27% to 101.69, and the euro rose 0.2% to $1.1232. The moves put two different concerns in focus for currency traders: whether spending on AI will pay off and whether France’s turmoil will continue to weigh on the euro.

Why AI investment worries weighed on the dollar

Dominic Bunning of Nomura told Reuters that inflows into equity markets had supported the dollar, but investors were questioning whether AI-linked companies could earn enough to justify the financing they were raising. He also raised the prospect of that investment having to generate returns in a period of higher interest rates. His comments described a shift in investor confidence, rather than a measured loss of profitability across the sector.

Lee Kyoung-min, an analyst at Daishin Securities, told Yonhap that concerns about credit risk and the profitability of AI investment remained unresolved, limiting the durability of the rebound. Foreign investors and institutions were net sellers of South Korean shares, while individuals bought, according to Yonhap’s account of the session.

France concerns persist despite the euro’s gain

France’s government said overnight curfews in violence-hit areas of its largest cities had brought some respite, Reuters reported, but further protests were planned for the weekend. Tommy von Brömsen, a foreign exchange strategist at Handelsbanken, said he expected concerns about France to persist and saw scope for further euro weakness. That view contrasted with the currency’s modest gain on the day.

Other currencies also rose against the dollar. The pound gained 0.66% to $1.339 after British labour-market data pointed to resilient employment. Reuters said markets were nearly fully pricing in a quarter-point Bank of England rate increase at its November 5 meeting, citing LSEG data. The yen gained 0.29% to 158.04 per dollar after an auction of longer-dated Japanese government bonds drew record demand.