However, upward momentum soon subsided and the yen was back to trading ranges as the market waits to see if Kan remains reluctant to intervene.
See how the dollar fell against the yen:
Kan's challenger in the election, Ichiro Ozawa, had promised more aggressive policies to help the recovery, including direct market intervention to stop the yen from rising. Concern that Ozawa would win had helped to cap the yen's gains ahead of the election.
Although Japanese events dominated the market, overall sentiment was a lot less certain ahead of new economic data from the U.S. as well as the euro zone.
Global risk sentiment improved at the start of the week because of strong Chinese data over the weekend and the new Basel III accord on bank capital ratios.
The positive impact was proving short-lived, however, because of concern that the new data will provide a reminder of the continued downside risks for the global economy.
In the U.S., retail sales data later in the day are expected to show a rise of only 0.3% last month, down from a 0.4% increase in July.
In the euro zone, the latest ZEW business sentiment survey from Germany came in very mixed. The current conditions index soared to 59.9 from 44.3, instead of rising to just 44.7 as expected, but the economic expectations index plummeted to -4.3 from 14. The market had been looking for it to stay stable at 14.
Sterling started the day lower but then recovered as it bounced around in the wake of U.K. economic numbers. Very soft house price data from the Royal Institution of Chartered Surveyors, with the headline balance falling to -32 in August instead of just to -12 as expected, initially pushed the pound lower.
Later, consumer price data showed that inflation remained flat at 3.1% in August from July rather than slipping to 3.0% as expected. As this higher inflation profile lifted expectations of higher interest rates, the pound bounced back up again
By midmorning, sterling was down at $1.5397 from $1.5429 late Monday in New York, according to EBS.
The dollar was down at Y83.31 from Y83.65 and the euro fell to Y106.99 from Y107.66.
The euro was also down at $1.2847 from $1.2873. It fell back from an earlier high of $1.2911 after the ZEW data.
At one stage, the dollar fell through parity against the Swiss franc for the first time since last December, falling all the way to CHF0.9996, before rebounding to CHF1.0027, still well down from CHF1.0072 late in New York.