Currencies

Trump worries hit dollar; pound boosted by Brexit court ruling

Dollar bills with Euro notes
Dan Kitwood | Getty Images

Politics dominated currency markets on Thursday as U.S. election worries kept the dollar weak against the yen while sterling rose more than one percent after a UK court ruled parliament would have to approve the start of Brexit talks.

The dollar recovered some ground to trade at less than $1.11 per euro, helped by a Federal Reserve meeting on Wednesday that again pointed towards a rise in interest rates next month, also likely to be backed by payrolls data on Friday.



Currencies to keep an eye on ahead of the US election
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Currencies to keep an eye on ahead of the US election

But investors were still preoccupied by U.S. elections and the prospect of a victory for Donald Trump that they fear would carry global risks to trade and growth.

Investors were unsettled by media reports that some agents at the FBI had wanted to press ahead with an investigation of the Clinton Foundation, the latest twist in a long-running inquiry into candidate Hillary Clinton's use of a private email server while she was secretary of state.

"There have been reports and rumours doing the rounds and we have to be respectful of those stories but I'm not expecting people to trade other than very speculatively on those reports," Jeremy Stretch of CIBC World Markets said.

Meanwhile, a robust U.S. nonfarm payrolls report on Friday is seen as a crucial ingredient to any Fed move. Employers are expected to have added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters.

But while traders are pricing in a 78 percent likelihood that the Fed will raise interest rates in December, the running assumption is that a Trump win has the potential to delay that move.

"While a December rate rise still seems the most likely outcome and the probability of a move in December has gone up to 78 percent overnight, we can't rule out the prospect of a delay if the U.S. economy undergoes a Trumpectomy in just under a weeks' time," CMC Markets strategist Michael Hewson said in a note.



Hedge the US election by closing your book: Strategist
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Hedge the US election by closing your book: Strategist

The dollar was last down 0.32 percent to 102.94 at 2:08 p.m. ET, with markets in Japan closed for a public holiday.

An average of polls compiled by RealClearPolitics website showed Clinton just 1.7 percentage points ahead of Trump nationally on Wednesday, with 47 percent support to his 45.3 percent.

But a Reuters/Ipsos daily tracking poll released on the same day showed Clinton ahead by 6 percentage points among likely voters.

The , which tracks the greenback against a basket of six major currencies, was flat at 97.08 after dropping as low as 97.079 earlier, its lowest since Oct. 11.

The Australian dollar was up 0.3 percent at $0.7681 against its U.S. counterpart.

The Mexican peso, considered a proxy for Trump's campaign due to that candidate's vows to curb immigration and reconsider trade relations, was down 1.23 percent to 19.123 pesos.