The dollar steadied on Thursday and is set to record its best weekly performance in nearly a year, benefiting from the weakness of the yen amid changes in Japan’s ruling party.

Against a basket of currencies, the dollar was little changed on Thursday at 98.77.

This week, markets faced political turmoil in Japan and France alongside the ongoing U.S. government shutdown, increasing investors’ demand for safe-haven assets such as gold, which fell on Thursday amid profit-taking after breaking the $4000 barrier and reaching a record high the day before.

Spot gold fell 0.4% to $4021.99 after hitting a record $4059.05 on Wednesday.

U.S. gold futures for December delivery dropped 0.7% to $4042.60.

According to the FedWatch tool from CME Group, markets expect an additional 25 basis points rate cut in both October and December with probabilities of 95% and 83%, respectively.

The yen took a heavy hit after conservative Sanae Takaichi was chosen as head of the Liberal Democratic Party, bringing her close to becoming the country’s first female prime minister. Her selection boosted bets on a return to heavy spending and ultra-loose monetary policy.

The Japanese currency rose slightly in the latest trading to 152.49 against the dollar, after falling to an eight-month low of 153 overnight. It has dropped more than 3% since the start of the week, marking its worst performance since September 2024.

The euro is also under pressure due to the worsening political crisis in France following the shocking resignation of Prime Minister Sébastien Lecornu and his government, although French President Emmanuel Macron is expected to appoint a new prime minister within 48 hours.

The single currency traded up 0.09% at 1.1639 dollars, ending three consecutive days of losses, though still down about 0.9% since the start of the week.

Movements in the yen and euro supported the dollar, which rose more than 1% during the week.

The British pound rose 0.07% to 1.3413 dollars after hitting a nearly two-week low in the previous session, while the Australian dollar gained 0.11% to 0.6594 dollars.

The New Zealand dollar rose 0.1% to 0.5792 dollars after falling in the previous session following a 50 basis points rate cut by the Reserve Bank of New Zealand.