REUTERS, Singapore

The dollar took a breather on Thursday after a strong run this week that has put it on track for its best performance in nearly a year, helped by a weak yen that has struggled amid a change of guard in Japan’s ruling party.

Markets this week have grappled with political risk in Japan and France alongside a lengthening US government shutdown, all of which have done little to stoke confidence in investors, who have sought safety in assets such as gold.

The yen has been whiplashed after hardline conservative Sanae Takaichi was picked as head of Japan’s Liberal Democratic Party, putting her on course to become the country’s first female prime minister and fuelling bets of a revival in big spending and loose monetary policy.

The Japanese currency was last a touch stronger at 152.55 per dollar, after having slid to an eight-month low of 153 per dollar overnight. It has fallen more than 3 percent for the week thus far, set for its worst performance since September 2024.

“The increase in dollar/yen has been quite relentless, and it seems like nothing can stop it from rallying,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“In the near term, the confirmation of Takaichi as PM and the upcoming October BOJ meeting might be the next catalyst for further weakness in the Japanese yen, especially if Takaichi reinforces her dovish views on fiscal and monetary policy, and the BOJ signals that it may not raise interest rates in the near term.”