On Thursday, the dollar’s losses prolonged as positioning for next week’s U.S. presidential election outlined the Federal Reserve’s current review, where policymakers indicated they were on track to hike rates the approaching month.
The greenback sheds its early modestly increased and slipped against the yen with markets in Japan closed for a public holiday.
It was previously down 0.7% at 102.57 yen, stumbling at its lowest levels since Oct. 4 and well off its Oct. 28 peak of 105.53.
“The Fed didn’t really tell us too much that we didn’t already know. The focus in FX is still on the narrowing lead that Clinton has over Trump,” said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong.
“And that’s seeing a conventional risk-off move in markets in thin liquidity, with Tokyo out,” she said.
Although Democratic candidate Hillary Clinton, perceived as the status quo candidate for markets, stayed ahead in many polls before Tuesday’s vote, other investors have started pricing in the probability of victory for her Republican competitor Donald Trump.
On Wednesday, an average of polls accumulated by the RealClearPolitics website presented Clinton just 1.7% ahead of Trump nationally, with 47% support to his 45.3%. However, a Reuters/Ipsos daily tracking poll released on similar day presented Clinton ahead by 6 percentage points among possible voters.
Additional denting risk sentiment in Asia, a U.S. naval base at Sasebo, in western Japan, was placed on lockdown after reports of gunshots. A Navy spokesperson stated there was no validation of an active shooter, and the base resumed to normal activities.
“Clearly, in any environment when risk aversion picks up, the yen remains the ideal safe-haven currency,” said Mitul Kotecha, head of FX strategy at Asia-Pacific for Barclays in Singapore.
“And also, you can’t ignore the fact that the BOJ didn’t move on policy. That wasn’t a surprise, but it does seem now, there is a sense that further action is some way off,” he added.
On Tuesday, the BoJ hold back from expanding its stimulus in spite of pushing back the time frame for hitting its 2% inflation goal.
The Fed Reserve kept interest rates unmoved on Wednesday as generally expected in its previous policy decision before the Nov. 8 vote, and indicated it could hike rates in December as the economy collects momentum and inflation picks up.
Traders were pricing in a 72% probability that the Fed will increase interest rates in December, according to the CME Group’s FedWatch Tool.
The key U.S. nonfarm payrolls report will be released on Friday, and could strengthen or undermine those hike bets. Employers are expected to have added 175,000 jobs in October, according to the median assessment of 106 economists polled by Reuters.
The euro <eur=>was up 0.2% $1.1116 after increasing 0.6 as high as $1.1125, its proudest peak since Oct. 11.
The dollar fell 0.3% against the Swiss franc<chf=> to 0.9696 franc, gearing up to test its overnight low of 0.9691 which was its lowest level since Oct. 3.
The dollar index, which tracks the dollar against a basket of six major currencies, plunged 0.3% to 97.089 after declining as low as 97.079, its lowest since Oct. 11.
The Australian dollar was almost flat against its U.S. counterpart at $0.7656 , however, slipped 0.7% against the increasing Japanese currency to 78.57 yen, its lowest since Oct. 14.
The Mexican peso, measured a proxy for Trump’s campaign because of the candidate’s vows to curb immigration and reexamine trade relations, decline to more than one month lows compared to the U.S. dollar.
The Mexican currency retreated to as low as 19.5172 pesos per dollar, its sluggish since Sep. 30.
Stay updated on the stock market as MXTrade reviews market events, and provides you with the most recent and accurate information. Sign up a live account with MXTrade today and experience our professional brokers!