Trump worries hit dollar;
pound boosted by Brexit court ruling
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[November 03, 2016]
By Yumna Mohamed
(Reuters) - Politics dominated currency markets on Thursday as U.S.
election worries kept the dollar weak against the yen <JPY=> 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 <EUR=D4>,
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.
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
"There have been reports and rumors doing the rounds and we have to be
respectful of those stories but Iím not expecting people to trade other
than very speculatively on those reports," Jeremy Stretch of CIBC World
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. [ECONUS]
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 canít rule out the prospect of a delay if the U.S. economy undergoes
a Trumpectomy in just under a weeksí time," CMC Markets strategist
Michael Hewson said in a note.
The dollar was last down 0.1 percent to 103.17 yen <JPY=> at 1135 GMT,
with markets in Japan closed for a public holiday.
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An employee of a bank counts US dollar notes at a branch in Hanoi,
Vietnam May 16, 2016. REUTERS/Kham
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 dollar index .DXY, which tracks the greenback against a basket of
six major currencies, was flat at 97.351 after dropping as low as 97.079
earlier, its lowest since Oct. 11.
The Australian dollar was up 0.1 percent at $0.7670 <AUD=D4> against its
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 0.4 percent <MXN=> to 19.2700 pesos.
(Additional reporting by Tokyo markets team; Editing by Jeremy Gaunt)
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