US dollar wobbles vs yen and euro, US presidential debate awaited

[TOKYO] The US dollar wobbled against the yen and euro on early on Monday, cautiously held in a narrow range ahead of the impending first debate between US presidential candidates that could determine the currency's near-term direction.

The greenback was off lows versus the yen and euro touched late last week after long-term rate hike expectations were tempered following the Sept 20-21 Federal Reserve policy meeting, but it remained on shaky ground as market focus shifted from monetary to political risk.

The US dollar was down 0.2 per cent at 100.800 yen. It saw a one-month low of 100.100 on Thursday before pulling back to as high as 101.250 towards the end of last week.

The euro nudged up 0.1 per cent to US$1.1238, adding to Friday's modest gains made after the release of relatively upbeat euro zone producers' manufacturing index (PMI) data.

The common currency briefly rose to as high as US$1.1258 on Thursday.

The market awaited the debate between Democrat Hillary Clinton and Republican Donald Trump, the first of three face-to-face contests, to be held at 0100 GMT on Tuesday.

"If the debate ends in favour of Mr Trump and adds to his support, we may see US dollar/yen slip on risk aversion. Mr Trump has strongly backed a weaker US dollar, which is likely to retreat particularly against the yen if he is seen to have taken the lead," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

The US dollar, on the other hand, fared better against the Australian and Canadian dollars as a slide in oil prices weighed on the commodity-linked currencies.

The Australian dollar was little changed at US$0.7622 after losing about 0.25 per cent on Friday. The Canadian dollar was also steady at C$1.3152 to the US dollar after sliding sharply on Friday from a peak around C$1.3000.

Sterling crawled up 0.1 per cent to US$1.2980, posting a small bounce after dropping 0.9 per cent on Friday, when it touched a five-week low near US$1.2900 on worries over Britain's exit from the European Union.

REUTERS