Dollar Slips Ahead of Key U.S. Data as Yen Holds Gains Following Takaichi’s Election Victory

The U.S. Dollar Index hovered near a one-week low at 96.952 as markets anticipate crucial labor and inflation reports following the brief government shutdown. The Japanese Yen remained firm at 155.85 per dollar, riding the wave of Sanae Takaichi’s electoral success. However, analysts warn of long-term weakness, with Commonwealth Bank of Australia predicting the pair could hit 164 by year-end due to Takaichi’s bold fiscal easing stance.

Meanwhile, the British Pound stabilized at 1.3682 after a volatile session, as traders weigh Prime Minister Keir Starmer's political crisis against rising rate-cut expectations. The Euro held steady at 1.19, benefiting from the greenback's broader retreat and reports of China urging domestic banks to diversify away from U.S. Treasuries, adding further pressure on the American currency.