Global Currency Shift Sparks Forex Frenzy Amid AI Developments

The yen and Swiss franc saw gains as safe-haven assets, resulting from tech stock declines and rising tensions over AI market impacts from China's DeepSeek. Anticipation around U.S. tariffs, central bank monetary policies, and upcoming global inflation data added to the market volatility.

The yen and Swiss franc surged on Monday as investors sought safe-haven assets amid a sharp decline in tech stocks. The market turmoil was partly driven by concerns over China's DeepSeek launching a cost-effective open-source AI model that challenges previous market assumptions regarding AI-driven demand across the tech supply chain.

Forex strategist Francesco Pesole noted a 'flight to safety' as investors veered towards yen and Swiss francs, straying from the dollar following recent tariff-related comments by U.S. President Donald Trump. Despite a dollar slump last week, renewed anxieties about a potential trade conflict with Colombia are influencing trading patterns.

Investor focus is now set to temporarily shift to global central bank policies and inflation metrics, with key decisions from the Federal Reserve and European Central Bank pending. Meanwhile, the Bank of Japan's recent rate hike indicates a firm stance on monetary tightening amid rising wages and prices.

(With inputs from agencies.)