The Japanese yen fell to its weakest level in nine months against the U.S. dollar on Wednesday, prompting fresh verbal warnings from Japanese officials in an effort to stem the currency’s decline, while the dollar edged higher ahead of the expected end of the U.S. government shutdown.

During European trading hours, the yen dropped to 154.82 per dollar — its lowest since February — before Finance Minister Satsuki Katayama intervened verbally to slow the slide.

Katayama said it was important for exchange rates to move in a stable manner that reflects economic fundamentals, noting that markets had recently seen “one-sided and rapid movements” in the yen’s value.

Mohamed Al-Sarraf, currency strategist at Danske Bank, commented that “verbal intervention is no longer as powerful as it once was,” adding, “for Japanese authorities to strengthen the yen meaningfully, direct market intervention may be necessary — a possibility within the coming months.”

Since early October, the yen has lost roughly 4.5% of its value, pressured by expectations of increased fiscal spending under new Prime Minister Sanae Takaichi and by improved global risk appetite amid optimism that the U.S. government shutdown will soon end.

Takaichi said Wednesday she “strongly hopes” the Bank of Japan will pursue a monetary policy that stabilizes inflation around 2%, driven by wage growth rather than higher import and commodity prices.

The yen also hit its weakest level since the euro’s inception, trading at 179.235 against the European currency.

Is the U.S. government reopening soon?

The Republican-controlled U.S. House of Representatives is expected to vote Wednesday afternoon on a deal to restore funding to federal agencies and end the shutdown that began on October 1.

Ending the shutdown would allow the release of key economic data, helping both investors and the Federal Reserve assess the health of the U.S. economy.

The U.S. dollar edged slightly higher on Wednesday, recovering part of its previous session’s losses, after data from ADP showed private-sector firms shed over 11,000 jobs per week in late October.

The report weighed on the dollar as it reinforced expectations for a potential Fed rate cut in December, though traders still see roughly a two-thirds chance of that outcome amid the ongoing data blackout.

Several Fed officials, including Chair Jerome Powell, have suggested that the lack of economic data could lead the central bank to keep rates unchanged at its next meeting.

Mohamed Al-Sarraf of Danske Bank said, “The main driver for the dollar now is what happens at the December Fed meeting,” adding that “while there’s some softness in the labor market, growth remains solid and core inflation is near 3%, so the Fed cannot ease aggressively.”

The U.S. dollar index, which measures the greenback’s performance against a basket of major peers, rose 0.1% to 99.58.

The British pound fell 0.2% to $1.3121, while the euro slipped 0.1% to $1.1575.

The Australian dollar gained 0.2% to $0.6538, while the New Zealand dollar was little changed at $0.5655.

A senior official at the Reserve Bank of Australia said Wednesday that policymakers are increasingly debating whether the current 3.6% cash rate is sufficiently restrictive to curb inflation, noting that this question “will be critical in shaping the next phase of monetary policy.”

Gold prices fell in European trading on Wednesday, retreating from a three-week high and heading for their first loss in four sessions amid profit-taking and a stronger US dollar in foreign exchange markets.

After passing through the Senate, the bill to reopen the US government — following the longest shutdown in the country’s history — is expected to go to a vote in the Republican-controlled House of Representatives later today.

Price Overview

Gold prices fell 0.7% to $4,098.93 per ounce, down from an opening level of $4,127.06, after reaching a session high of $4,145.62.

On Tuesday, gold gained 0.3%, marking its third consecutive daily advance and hitting a three-week high at $4,149.02 per ounce, supported by safe-haven demand.

US Dollar

The US Dollar Index rose about 0.2% on Wednesday, recovering from a two-week low and reflecting renewed strength in the greenback against both major and minor currencies.

The rebound came as markets anticipated an official end to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now moves to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

US Interest Rates

Federal Reserve Governor Steven Miran said on Monday that a 50-basis-point rate cut would be appropriate in December, noting that inflation is falling while unemployment is rising.

According to the CME FedWatch tool, market pricing currently implies a 64% chance of a 25-basis-point rate cut in December, versus a 36% probability of no change.

Investors are closely watching comments from Federal Reserve officials and expect government economic data releases to resume starting Thursday.

Gold Outlook

UBS analyst Giovanni Staunovo said, “Everyone is waiting for more clarity on the government shutdown and when official US economic data will resume. We may see some consolidation before prices move higher again — the broader uptrend in gold remains intact.”

ANZ Bank noted in a research report that gold prices broke through resistance at $4,050 per ounce after a period of consolidation, confirming the prevailing bullish momentum.

The bank added that the next resistance zone lies between $4,160 and $4,170, and a breakout above that range could push prices toward the record level of $4,380 per ounce.

Meanwhile, JPMorgan said in a note on Wednesday that central banks and consumers are expected to act as “reliable buyers” during price dips, forecasting gold to exceed $5,000 per ounce by the fourth quarter of 2026.

SPDR Gold Trust

Holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 4.3 metric tons on Tuesday to 1,046.36 metric tons — the highest level since October 24.

The euro fell in European trading on Wednesday against a basket of major currencies, retreating from a two-week high versus the US dollar amid profit-taking and corrective moves, while the greenback strengthened as markets anticipated an imminent end to the longest government shutdown in US history.

Inflationary pressures have eased somewhat for European Central Bank policymakers, following recent data showing a slowdown in inflation across the eurozone in October — boosting expectations for a potential rate cut in December.

Price Overview

The euro fell 0.1% against the US dollar to $1.1570, after opening at $1.1582 and reaching a session high of $1.1587.

The common currency had gained more than 0.2% on Tuesday, hitting a two-week high of $1.1606, supported by private data pointing to weakness in the US labor market.

US Dollar

The US Dollar Index rose around 0.2% on Wednesday, recovering from a two-week low as the greenback strengthened against both major and minor peers.

The rebound came as markets anticipated a resolution to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now heads to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

Eurozone Interest Rates

Recent data from Europe showed that overall inflation in the euro area slowed in October in line with expectations, while core inflation remained steady — easing some of the pressure on ECB policymakers.

Following the data, money-market pricing for a 25-basis-point rate cut by the European Central Bank in December rose from 10% to 25%.

Investors now await further economic data releases from across Europe, along with comments from ECB officials, to reassess the probability of a December rate move.

The Japanese yen slid to a nine-month low against the US dollar in Asian trading on Wednesday, heading toward losing the 155-yen level for the first time since February, as the greenback strengthened amid growing expectations that the longest US government shutdown in history is about to end.

The yen also came under additional pressure from mounting speculation that Japan is entering a new phase of fiscal and monetary stimulus to support its weak economy, following recent comments from Prime Minister Sanae Takaichi.

Price Overview

The dollar rose 0.4% against the yen to ¥154.79 — the highest level since February — after opening at ¥154.14 and touching a session low of ¥154.04.

The yen ended Tuesday’s session flat against the dollar, after losing around 0.75% over the previous two days amid pressure from Takaichi’s pro-stimulus remarks.

US Dollar

The US Dollar Index rose about 0.2% on Wednesday as it recovered from a two-week low, reflecting renewed strength in the greenback against a basket of major and minor currencies.

The rebound came as markets anticipated an official end to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now moves to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

Sanae Takaichi

Prime Minister Takaichi announced plans to draft a new multi-year fiscal target designed to allow greater flexibility in government spending — a shift that could weaken Japan’s commitment to fiscal discipline.

She also reiterated her call for the Bank of Japan to move cautiously and slow the pace of rate hikes, emphasizing the need to balance economic growth support with price stability.

Analysts believe Takaichi’s comments may signal the start of a new phase of expansionary fiscal policy to stimulate growth, while simultaneously presenting additional challenges for the Bank of Japan as it seeks to coordinate monetary tightening with a more relaxed fiscal stance.

Interest Rate Outlook

Market pricing for a potential 25-basis-point rate hike by the Bank of Japan in December remains steady around 50%.

Investors are awaiting further data on inflation, unemployment, and wage growth in Japan before reassessing those expectations.