Tuesday, 8 November 2016
Dollar steady, markets bet on Clinton win in looming U.S. presidential vote
The dollar steadied in Asia on Tuesday, keeping previous session gains as markets wagered on a victory for Hillary Clinton in the U.S. presidential election after the FBI cleared her of any wrongdoing in its latest probe of her use of a private email server.
With hours to go before Americans vote, Democratic candidate Clinton has about a 90 percent chance of defeating Republican Donald Trump in the race for the White House, according to the final Reuters/Ipsos States of the Nation project.
Federal Bureau of Investigation Director James Comey said in a letter to Congress on Sunday that the agency's review of newly discovered emails did not find anything to warrant any criminal charges against Clinton.
The news prompted stock markets across the globe to rally on Monday, notching their biggest gains in weeks. Wall Street had closed lower for nine days in a row through Friday, its longest losing streak in more than 35 years.
The U.S. dollar also perked up from its recent slump and gained against rivals. The greenback was steady against the perceived safe-haven yen at 104.44, well above a one-month low of 102.54 yen plumbed on Thursday.
"I think most people are expecting Clinton to be the U.S. president, as shown by the jump in the stock markets," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
"The dollar/yen is firm, but on the upside, around 105 there are still some Japanese exporter orders," he said.
Finance Minister Taro Aso said on Tuesday that Japan would need to respond to currency market moves if results of the U.S. presidential election were to cause a sudden spike in the yen, when asked about market speculation that the safe-haven currency might spike on a Trump victory.
"I won't comment on results of other country's elections. But if it were to affect currencies, we would need to watch and respond, as stability in currencies is always important," Aso told reporters after a cabinet meeting.
The euro EUR= was also steady against the dollar at $1.1040, well shy of its Friday peak of $1.1143, which was its highest since Oct. 11.
The dollar struck recent lows on signs of a tightening race between Clinton - viewed as the status quo candidate by most investors - and Trump, whose stated views on foreign policy, trade and immigration have raised fears about their potential impact on global growth.
The dollar index .DXY, which tracks the U.S. currency against a basket of six major currencies, stood at 97.753, well above Friday's low of 96.894, its lowest since Oct. 10.
The dollar was also steady against the Mexican peso at 18.57. It tumbled 2.3 percent overnight against the peso, which is viewed as a proxy for U.S. election bets because Mexico is considered most vulnerable to Trump's pledged trade policies.
The Australian dollar gave back some of its overnight gains after rising 0.7 percent on Monday, its biggest daily percentage gain since Oct. 19. It was last down 0.4 percent at $0.7699.
Undermining the Aussie were trade figures from China, Australia's biggest trading partner. Data showed China's exports and imports fell more than expected in October, adding to doubts about how long that country's recent pick-up in economic activity can be sustained.
"The China economy remains stagnant,"said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
"The renminbi is likely to continue to drop against the U.S. dollar and the euro due to capital outflows and the negative outlook for the Chinese economy," he said.
China's yuan eased on Tuesday after the central bank set another weaker midpoint to reflect global dollar strength, but trade was cautious ahead of the U.S. presidential election.