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Dollar rises as risk-off hits AI stocks and September Fed hike bets persist
The dollar strength came alongside a sharp global selloff, including South Korea’s KOSPI dropping 10.8% and multiple chip names falling more than 9%.
The dollar rose broadly on Tuesday as investors weighed a worsening risk mood after a sharp selloff in AI related technology shares and continued expectations that the Federal Reserve could still raise rates in September, according to Action Forex.
Asian markets were hit the hardest, with South Korea’s KOSPI down 10.8%, its largest daily drop since March 4, after falling as much as 11.3% intraday and triggering circuit breaker measures. Japan’s Nikkei 225 slid 4.0% and ended at its weakest close in more than two months.
Semiconductor stocks drove much of the pressure, including SK Hynix down 14.7% after its ADRs hit record lows in New York, and Samsung Electronics falling 14.4%, its biggest daily decline since 2008. Other AI and chip suppliers also fell, with Kioxia Holdings dropping as much as 18% and names such as Tokyo Electron, Disco, Nikon, and Murata Manufacturing each down more than 9%.
The move also reflected support from interest rate expectations, with traders showing little appetite to unwind another Fed hike call even as Brent crude slid below $85 after last week’s rally above $100. Action Forex also noted diplomatic developments involving Iran, Saudi Arabia, and Oman, alongside comments from President Donald Trump that Washington and Tehran were engaged in very friendly negotiations.
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