Dollar set for strongest week since November, yen steadies before polls

Global investors pivoted toward the U.S. dollar on February 6, 2026, driving the currency toward its strongest weekly performance since November as a massive rout in technology stocks and cryptocurrencies fueled a rush for safe-haven assets. This market turbulence was primarily triggered by disappointing corporate guidance regarding aggressive artificial intelligence spending and the nomination of Kevin Warsh as the next Federal Reserve Chair, which signaled a potentially more hawkish path for interest rates. The flight to the greenback occurred as traditional alternatives, such as the Japanese yen and Bitcoin, faced their own idiosyncratic pressures or sharp liquidations. The tech sector faced significant scrutiny following Amazon’s capital expenditure guidance, which exceeded analyst expectations and sparked fears that massive AI investments are not yet yielding sufficient productivity gains. This 'positioning flush' saw investors de-risking across multiple asset classes, leading to Bitcoin’s steepest weekly decline since 2022 and gold prices logging shaky gains after a bruising week. Market strategists noted that the dollar effectively became the 'best bet' for traders as safe-haven supply dwindled elsewhere in the financial system. In Japan, the yen stabilized slightly at 156.92 per dollar but remained on track for its worst weekly showing since October. Markets are particularly on edge ahead of a critical national election on Sunday, where a potential victory for Prime Minister Sanae Takaichi has raised concerns about fiscal expansion and burgeoning government debt. Analysts warn that an outsized win for Takaichi could lead to a reduction in consumption taxes, further straining the Japanese bond market and keeping the yen under significant selling pressure. Central bank activity in Europe and the UK also contributed to the week's narrative, with both the European Central Bank and the Bank of England electing to keep interest rates steady. While the euro and sterling saw modest recoveries on Friday, they remained overshadowed by the dollar's dominance. Looking ahead, investors are awaiting the delayed U.S. payrolls report for January, which is expected to offer crucial insights into whether the world's largest economy is losing enough momentum to justify interest rate cuts in the first half of the year.