Dollar Falls as Political Uncertainty Shadows Recent Gains

The US dollar took a negative turn today after an increase in traders’ demand for gold as a safe haven prior to the presidential elections in the USA, which is due to happen on November 8.

Political uncertainty increased in the world’s biggest economy after the FBI said it’s investigating new emails related to Hillary Clinton’s use of a private server when she was the secretary of state. The statement decreased Hillary’s lead over Donald Trump to be as small as 2.2% according to latest polls.

Meanwhile markets see only a small probability for the US Federal Reserve to raise interest rates when its policy meeting ends on Wednesday. Traders are still awaiting the meeting’s minutes to search for clues on the likelihood of a rate hike in December, which currently has a 72.5% chance of happening, according to the CME Group’s FedWatch tool.

The euro was supported by positive data in China, which raised the demand for high yield currencies. The Caixin manufacturing Purchasing Managers Index improved in October to 51.2 from a previous reading in September at 50.1. The non-manufacturing PMI also rose to 54.0 from 53.7 last month.

EUR/USD rose to 1.1044 as of 17:04 GMT as the pair moved from yesterday’s low at 1.0947 to end a month that saw a 2.45% decline. The EUR/USD traded at 1.0960 earlier today before rising due to demand for safety.

The US currency also dropped against a basket of major currencies as the Dollar Index retreated to 97.94 at 2:52 GMT from 98.44 yesterday.

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