Dollar slips against Swiss franc on US election uncertainty

Getty Images

The U.S. dollar slipped against the safe-haven Swiss franc on Friday on nervousness ahead of next week's U.S. presidential election, despite a solid U.S. jobs report that supported expectations for a Federal Reserve rate hike next month.

Traders largely looked past the U.S. October nonfarm payrolls report, which showed wage growth that reinforced bets of a rate hike in December, choosing to position themselves ahead of an increasingly uncertain race for the White House.

How to hedge US election event risk in currencies
How to hedge US election event risk in currencies

The battle between Democrat Hillary Clinton and Republican rival Donald Trump has tightened significantly in the past week, as several swing states that were leaning toward Clinton are now considered toss-ups, according to the Reuters/Ipsos States of the Nation project.

Clinton has been viewed as the candidate of the status quo, while many fear that a Trump victory on Tuesday would carry global risks to trade and growth and derail the Fed from hiking rates next month.

The dollar was last down 0.26 percent against the at 0.9713 franc, near a one-month low of 0.9691 touched on Wednesday. The dollar was up against the at 103.16 yen.

"Investors are in risk-reduction mode into the election," said Ian Gordon, FX strategist at Bank of America Merrill Lynch in New York. "They're probably shorting the dollar versus safe-haven currencies as some of the polls are getting to a point where it's too close to call."

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

The dollar surrendered brief gains notched against the euro after the U.S. jobs report. The euro was trading up against the dollar at $1.1118 after initially slipping 0.2 percent to a session low of $1.1081.

The jobs report showed a year-on-year increase in average hourly earnings of 2.8 percent, the biggest gain since June 2009, from 2.7 percent in September. U.S. employers added 161,000 jobs last month, below expectations for a gain of 175,000 jobs, according to a Reuters poll of economists. The gain was still seen as an indication of a strong pace of hiring.

"The report generally is still consistent with a December hike," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

Traders last saw a roughly 72 percent chance that the U.S. central bank would hike rates next month, unchanged from Thursday, according to CME Group's FedWatch program.