Investing.com– Most Asian currencies recovered from Thursday’s recent losses, with the Japanese yen remaining near nearly three-month lows while the dollar continued to be supported by expectations of slower rate cuts.

Regional currencies suffered from increased risk aversion in markets as anticipation of a tight US presidential race also kept investors on the edge, as did heightened concerns in the Middle East.

Risk aversion was favorable for the dollar and gold. However, demand for the Japanese yen was faint amid doubts over how much room the Bank of Japan has to raise interest rates further.

Broader Asian currencies were also skittish as investors awaited further signals on stimulus measures in China.

Japanese Yen Holds Amid Intervention Warnings

The Japanese yen pair fell slightly on Thursday after hitting its highest level in almost three months in the previous session.

The yen gained some support after Japanese government officials warned against “unilateral” moves in currency markets in airy of the yen’s recent weakening. Their statements raised fears of intervention in the currency market.

The yen took several signals from faint data that showed a decline in economic activity in October.

The yen remained delicate amid growing doubts about further interest rate increases by the BOJ, especially in anticipation of Sunday’s general election in Japan.

The ruling Liberal Democratic Party may potentially have to seek a coalition to stay in power, changing Japan’s political landscape and limiting the BOJ’s ability to make changes to monetary policy.

The BOJ is scheduled to meet next week and is widely expected to keep interest rates steady. Earlier, the arrival from Tokyo is scheduled to take place on Friday.

The dollar is sturdy as yields rise due to bets on a smaller interest rate cut

In Asian trade, the indices and fell slightly, but remained close to three-month highs. The dollar’s gains followed a acute rise in Treasury yields.

The dollar was boosted by growing bets that the Fed will cut interest rates by a smaller 25 basis points in November amid continuing signs of resilience in the U.S. economy.

A publication later in the day is expected to provide more guidance in this regard.

On the electoral front, improved prospects for GOP nominee Donald Trump also strengthened the dollar on bets that his policies would be inflationary.

Broader Asian currencies strengthened slightly on Thursday, recouping some of their recent losses.

The Australian dollar pair rose 0.2% after mixed data, while the South Korean won pair was flat after a weaker-than-expected showing that the economy barely grew in the third quarter.

The Chinese yuan pair fell 0.2%, recovering slightly from a nearly two-month high earlier this week.

The Singapore dollar pair fell 0.1%, while the Indian rupee pair fell slightly from near-record highs.