Sun, Nov 06, 2016 - Page 14 News List

Election woes sap US dollar rally

Bloomberg

A US dollar rally on US jobs growth proved short-lived as attention swung back to Tuesday’s US presidential election.

The greenback fell for the sixth straight day in the longest stretch of losses since March even after a report showed the US last month added 161,000 jobs, supporting a US Federal Reserve interest-rate increase next month.

The employment increase was just shy of the median forecast of 173,000 in a Bloomberg survey of economists, while September’s figure was revised higher.

“It would be difficult for the market to move much given the elections on Tuesday,” said Andres Jaime, a foreign-exchange strategist in New York at Barclays PLC. “For the [US] dollar, given that the market is already pricing in a high probability for a hike, it already corroborates what’s already priced in.”

US dollar traders are already turning their attention to the vote for the White House as the race between Democratic US presidential candidate Hillary Rodham Clinton and Republican candidate Donald Trump tightens. Clinton’s odds of victory have declined over the past week, coinciding with a five-day slump in the currency amid investor concern that Trump, who is perceived to be more unpredictable than his Democratic rival, would be likely to upend US trade agreements.

The Bloomberg Dollar Spot Index fell 0.2 percent as of 5pm on Friday in New York, after gaining as much as 0.2 percent.

The greenback lost 0.3 percent to US$1.1141 per euro and added 0.1 percent to ¥103.12.

“The market reaction appears to be relatively subdued because the market is distracted by the presidential election,” said Paresh Upadhyaya, director of currency strategy in Boston at Pioneer Investments, which oversees about US$245 billion.

The 76 percent probability traders are assigning to a rate hike by next month is up from 69 percent on Oct. 28, according to data compiled by Bloomberg.

The numbers have remained high even as Clinton’s chances of victory slipped to 65 percent according to poll aggregator FiveThirtyEight, from 82 percent last week. Her narrowing lead has extended the greenback’s loss this year to 3 percent.

In Taipei, the New Taiwan dollar on Friday fell against the greenback, retreating NT$0.005 to close at NT$31.473. Turnover was US$443 million. Despite the daily loss, the NT dollar this week rose 0.5 percent against the US dollar from the previous week’s US$31.639.

The British pound posted its best week since 2009 as a flurry of news offered relief for the currency.

Sterling climbed on speculation a High Court ruling will delay or soften the terms of the nation’s exit from the EU and it received a further boost when the Bank of England said it is no longer expecting to cut interest rates again this year.

Even after its 2.8 percent jump this week, to about US$1.25 as of the Friday market close in London, the pound is still down 16 percent since the June 23 referendum.

Turkey’s lira led losses among 24 emerging-market peers. A court ordered the nation’s most prominent Kurdish lawmakers jailed, sharply escalating a crackdown personally led by Turkish President Recep Tayyip Erdogan and spurring fears of renewed violence and a possible rupture with the West.

Additional reporting by CNA

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