Asia FX muted, yen firms slightly after tumbling on Takaichi election

Investing.com-- Most Asian currencies kept to tight ranges on Wednesday, while the yen recovered some ground after weakening sharply on fiscal dove Sanae Takaichi’s election as Prime Minister. 

The dollar weakened slightly in Asian trade, but was sitting on overnight gains amid a rout in gold and precious metal prices, which slumped from record highs. 

Markets at large were awaiting more cues on major economies from a host of events and prints due in the coming days. The Bank of Korea is set to decide on interest rates on Thursday, while key U.S. and Japanese consumer inflation readings are on tap, as is purchasing managers index data from across Asia. 

Japanese yen recoups some ground after Takaichi-linked rout

The Japanese yen firmed slightly on Wednesday, with the USD/JPY pair falling 0.1%. 

The pair had surged 0.8% on Tuesday after Takaichi’s confirmation as Japan’s first female prime minister.

Takaichi is widely viewed as a fiscal dove, and is expected to dole out more government stimulus and spending, as well as oppose any more interest rate hikes by the Bank of Japan.

Speculation over Takaichi’s premiership, after she was elected head of the Liberal Democratic Party in September, had battered the yen over the past month. 

Separately, trade data for September showed Japan clocking an unexpected deficit, as exports rebounded less than expected while imports blew past expectations. 

Focus this week is squarely on Japanese consumer price index inflation for September, due on Friday. The print comes just a week before a BOJ meeting, where it remains unclear whether the central bank will hike interest rates.

Dollar steady amid gold losses, CPI test looms

The dollar index and dollar index futures fell nearly 0.1% each in Asian trade, but were sitting on overnight gains.

The greenback benefited from signs of rapid cooling in the gold rally, as bullion prices plummeted from recent record highs. Profit-taking in gold spurred some flows into the dollar. 

But the greenback still remained largely rangebound amid growing uncertainty over the U.S. economy, especially as an ongoing government shutdown entered its third consecutive week.

Focus is chiefly on upcoming consumer price index inflation data for September, due on Friday. The print will be the first official economic data point from the government since the beginning of the shutdown in early-October. 

The Bureau of Labor Statistics said it will release the reading at 08:30 ET (00:30 GMT) on Friday. 

Broader Asian currencies tread water amid a dearth of major trading cues. The Chinese yuan’s USD/CNY pair was flat as markets awaited more insight into simmering trade tensions between Beijing and Washington, although some comments from U.S. officials spurred hopes that a tariff  escalation will not happen. 

The South Korean won’s USD/KRW pair fell 0.1%, with focus on the conclusion of a Bank of Korea meeting on Thursday. The central bank is widely expected to keep interest rates unchanged, as it digests a recent rebound in local inflation. 

The Australian dollar’s AUD/USD pair rose slightly, while the Singapore dollar’s USD/SGD pair fell 0.1%.

The Taiwan dollar’s USD/TWD pair rose 0.1%.