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The yen hovered near a three-month low on Friday, set for a fourth consecutive weekly decline, as Japan prepares for a general election that could impact the Bank of Japan’s policy plans. The dollar, on the other hand, retreated from recent highs in line with lower U.S. Treasury yields, but still poised for a weekly gain.

Japanese voters will cast their ballots in a general election over the weekend, with indications that the ruling Liberal Democratic Party (LDP) may face challenges. This uncertainty could complicate the BOJ’s rate hike trajectory as it aims to transition smoothly from near-zero Interest rates. The yen weakened to 152 per dollar and is on track for a 1.5% weekly drop.

Meanwhile, the dollar paused after reaching a three-month high earlier in the week, supported by reduced expectations of aggressive Fed rate cuts and speculation of Donald Trump’s return as U.S. president. Against the euro, the dollar remained strong, while the Eurozone‘s business activity showed signs of stagnation.

In other currency news, the Australian and New Zealand dollars were set to decline by around 1% each for the week, influenced by a stronger dollar and uncertainty surrounding the upcoming U.S. election. The dollar index edged up to 104.09, marking a fourth consecutive week of gains.

Overall, global currency markets continue to be influenced by political developments and economic data, shaping investor sentiment and market movements.

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