The dollar firmed as markets reacted to U.S. President Donald Trump’s nomination of Kevin Warsh for the next Federal Reserve chair. The move boosted the dollar index by 0.1% in Asian trade, extending gains from the previous week. Warsh, a former Fed governor, is seen as favoring lower rates but potentially less dovish on long-term monetary policy.

The Japanese yen weakened significantly, with the yen rising as much as 0.5% against the dollar. Prime Minister Sanae Takaichi’s comments downplaying potential currency intervention sparked this movement. Takaichi’s remarks suggested a softer yen could benefit exporters, contrasting with previous warnings about prolonged currency weakness.

Broader Asian currencies traded in a flat-to-low range, awaiting economic cues from the Reserve Bank of Australia meeting and key U.S. payrolls data. The Australian dollar faced pressure, expected to rise by 25 basis points, while the South Korean won was pressured by equity market outflows. The Chinese yuan showed minimal reaction to mixed PMI data.

Analysts at ANZ expect a Warsh-led Fed to favor a smaller balance sheet, potentially limiting fiscal expansion. However, Warsh may emphasize labor weakness, suggesting further interest rate cuts. Investors are closely watching these developments for clues on future monetary policy and currency movements.