Asia FX Steady as Yen Recovers After Takaichi Election Shock
Most Asian currencies traded within tight ranges on Wednesday, while the Japanese yen regained some ground after tumbling following Sanae Takaichi’s election as Prime Minister. Takaichi, known as a fiscal dove, was confirmed as Japan’s first female leader, sparking speculation over fresh government spending and resistance to further rate hikes by the Bank of Japan.
The yen had dropped sharply after her win but strengthened slightly on Wednesday, with the USD/JPY pair slipping 0.1%. The currency had previously surged 0.8% as traders reacted to her appointment. Markets remain cautious as Japan prepares to release its September consumer price index on Friday, just a week before the next BOJ meeting.
Meanwhile, Japan’s trade data for September showed an unexpected deficit. Exports grew less than expected, while imports rose sharply, signaling persistent economic headwinds.
Dollar Holds Gains as Gold Prices Slide
The U.S. dollar weakened slightly in Asian trading but remained supported by overnight gains. A steep decline in gold and precious metals—which fell from record highs—boosted demand for the greenback. The dollar index and futures each slipped about 0.1%, yet stayed within a tight range as investors awaited fresh inflation data.
Profit-taking in gold markets spurred renewed flows into the dollar. However, sentiment stayed cautious as the ongoing U.S. government shutdown stretched into its third week, adding uncertainty to the economic outlook.
Traders are closely watching the upcoming U.S. CPI report for September, due on Friday at 08:30 ET (00:30 GMT). It will be the first official economic release since the shutdown began earlier in October.
Broader Asian Currencies Stay Flat Ahead of Key Events
Across Asia, most currencies showed little movement. The Chinese yuan (USD/CNY) pair was steady as investors awaited updates on trade relations between Beijing and Washington. Some reassuring remarks from U.S. officials raised hopes that new tariff escalations may be avoided.
The South Korean won (USD/KRW) dipped 0.1%, with markets awaiting the Bank of Korea’s rate decision on Thursday. Policymakers are expected to keep interest rates unchanged as they monitor a modest recovery in inflation.
Elsewhere, the Australian dollar (AUD/USD) edged slightly higher, while the Singapore dollar (USD/SGD) fell 0.1%. The Taiwan dollar (USD/TWD) also gained 0.1%, reflecting generally calm regional sentiment.
Overall, traders are holding steady ahead of multiple key economic releases across Asia, Japan, and the U.S., which could shape currency movements later this week.
