Dollar Wavers Amid Market Stimulus and Leadership Uncertainty

The dollar showed signs of instability, poised for a third consecutive month of declines. U.S. economic data and China's stimulus measures influenced market reactions. Japan's unpredictable leadership contest also impacted currency movements. The Federal Reserve's focus on maintaining a healthy labor market while managing inflation further strained the dollar.

The dollar exhibited instability on Friday, heading for its third straight month of declines. Investors carefully monitored U.S. economic data to gauge future interest rate cuts, while China's plethora of stimulus measures buoyed risk-sensitive currencies.

In Japan, the yen dropped to 145.57, its lowest point since early September, fueled by an unpredictable leadership contest within the ruling party. Markets anticipated the possible victory of hardline nationalist Sanae Takaichi, influencing market sentiments.

U.S. labor market data and robust corporate profit reports pointed to economic strength, but the dollar remained weak as traders priced in significant interest rate cuts for the rest of the year. The Federal Reserve's recent policy shift, focusing on employment alongside inflation control, added to the dollar's pressures.

(With inputs from agencies.)