US dollar falls against euro, rallies against peso on US election jitters

[NEW YORK] The US dollar hit its lowest level in nearly three weeks against the euro on Tuesday on US political uncertainty, while the Mexican peso hit a more than three-week low on fears that Republican Donald Trump might win the US presidential election.

Traders remained nervous about the outcome of the Nov 8 election after news on Friday that the FBI was probing newly found emails related to US Democratic presidential candidate Hillary Clinton's use of a private server.

Mrs Clinton is viewed as the candidate of the status quo, while there is greater uncertainty over what a victory for Mr Trump might mean for US foreign policy, international trade deals and the domestic economy.

Analysts said a Trump victory could throw the Federal Reserve off its presumed course of hiking interest rates in December. Investors awaited Wednesday's Fed statement for any new indications that a rate increase is likely at the US central bank's December meeting.

"The uncertainty over the election is certainly weighing on the dollar," said Stephen Casey, senior foreign exchange trader at Cambridge Global Payments in New York.

Analysts said traders who were bullish on the US dollar were selling the currency ahead of the election. The selling accelerated in the afternoon session with a decline in US shares, which put the benchmark S&P 500 stock index last down 0.88 per cent.

The US dollar index, which measures the greenback against a basket of six major rivals, fell about 0.8 per cent to a nearly two-week low of 97.640. The index had gained 3.1 per cent in October to mark its strongest month in just under a year.

The euro gained about 0.8 per cent against the US dollar to US$1.1069, its highest since Oct 12. The US dollar fell 1.5 per cent against the Swiss franc to a nearly one-month low of 0.9730 franc and fell about one per cent against the yen to an eight-day low of 103.81 yen.

The Mexican peso fell about 2.2 per cent against the greenback to 19.2700 pesos per US dollar, its weakest level since Oct 7.

A potential Trump victory has been viewed as a key risk for the Mexican currency given Mr Trump's promises to clamp down on immigration and rethink trade relations.

"With dollar/Mex outperforming today, it highlights how markets are rethinking the election outcome and not ruling out a Trump presidency," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, on the US dollar's acceleration against the peso.

REUTERS