Asian Currencies Hold Steady as Yen Rebounds After Takaichi’s Election; Dollar Firms on Gold Selloff

Asian currencies moved in narrow ranges on Wednesday, with the Japanese yen regaining some ground after sharp losses triggered by the election of fiscal dove Sanae Takaichi as Japan’s first female prime minister. The dollar, meanwhile, remained firm in Asian trading, supported by a retreat in gold prices after bullion fell from record highs.

The USD/JPY slipped 0.1% after surging 0.8% on Tuesday following Takaichi’s confirmation. Markets view Takaichi as a pro-stimulus leader likely to expand government spending and oppose further rate hikes by the Bank of Japan (BOJ). Her rise to leadership had fueled yen weakness throughout September amid expectations of looser fiscal policy.

Japan’s September trade data showed an unexpected deficit as exports underperformed and imports surged. Traders are now focusing on Japan’s consumer price index (CPI) for September, due Friday, which could guide the BOJ’s upcoming policy decision next week.

The U.S. dollar index eased 0.1% but held near overnight highs. The greenback gained as investors shifted out of gold, which plunged after a historic rally. However, dollar gains were capped by lingering uncertainty over the U.S. economy, as the government shutdown stretched into its third week. Markets await Friday’s U.S. CPI data, the first major release since early October.

Elsewhere in Asia, most currencies saw muted moves. The Chinese yuan (USD/CNY) traded flat as investors monitored ongoing trade discussions with the U.S. The South Korean won (USD/KRW) slipped 0.1% ahead of the Bank of Korea’s policy meeting on Thursday, where rates are expected to remain unchanged. The Australian dollar (AUD/USD) rose slightly, the Singapore dollar (USD/SGD) dipped 0.1%, and the Taiwan dollar (USD/TWD) edged up 0.1%.