The Yen edged down on Friday as investors anticipated the outcome of Japan's runoff to select a new prime minister, whilst a series of stimulus measures from China supported risk-sensitive currencies.

The Yen declined by over 1%, reaching 146.495, its weakest point since 3rd September, as markets prepared for a potential win by hardline nationalist Sanae Takaichi, a strong critic of further interest rate hikes, in one of Japan's most unpredictable leadership contests in recent years.

From a record field of nine candidates, Economic Security Minister Sanae Takaichi and former Defence Minister Shigeru Ishiba garnered the most votes, advancing to the second round, Reuters reports.

“If Takaichi wins and Dollar/Yen goes back to 160, markets might see an earlier BOJ (Bank of Japan) hike or FX interventions again, although with top currency diplomat Kanda gone those might be a lot less punchy than previously,” said UBS analysts.

Elsewhere, China's wave of stimulus measures this week sustained investor risk appetite, boosting stocks, commodities, and risk-sensitive currencies. 

These measures have included reducing the reserve requirement ratio for banks by 50 basis points to increase lending capacity, along with several cuts to key interest rates.

In addition, the Dollar index, measuring the currency against six major peers, stood at 100.86 at the time of writing, not too far away from the 14-month low of 100.21 reached on Wednesday.

Whereas the Euro held steady at $1.11615, just under the 14-month high of $1.1214 hit on Wednesday.

Sterling dipped slightly to $1.3381 but stayed close to the 2-1/2 year high it reached earlier in the week. 

Similarly, the Australian and New Zealand Dollars remained near multi-year highs, bolstered by China's stimulus measures. 

The Australian Dollar slipped to $0.68705, just below the 18-month high it hit on Wednesday, while the New Zealand Dollar traded at $0.6298, close to its nine-month peak.

On Thursday, Chinese leaders vowed to bolster the country's faltering economy with "forceful" interest rate cuts and adjustments to fiscal and monetary policies, raising expectations for additional stimulus measures.