US dollar slumps against euro, jumps against peso on potential Trump win

[NEW YORK] The US dollar hit its lowest level in more than three weeks against the euro, yen, Swiss franc and sterling on Wednesday on nervousness about a potential victory for US Republican presidential candidate Donald Trump next week.

Investors are rethinking long-held bets on a Nov 8 victory for Democrat Hillary Clinton. Mrs Clinton held a 5 per cent age point lead over Mr Trump, according to a Reuters/Ipsos opinion poll released on Monday, but some other polls showed her Republican rival ahead by one to two percentage points.

The US dollar index, which measures the greenback against a basket of six major currencies, was last down 0.3 per cent at 97.403, after falling 0.6 per cent to 97.178, its lowest level since Oct 11.

The Mexican peso tumbled to a more than one-month low against the greenback, at 19.4667 pesos per US dollar, on fears of how a Trump victory could hurt the Mexican economy.

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

"There is a huge amount of unknown unknowns around Trump," said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

The euro was last up 0.3 per cent at US$1.1088 after rising 0.6 per cent in afternoon trading to US$1.1123, its highest level since Oct 11. Against the yen the US dollar was down 0.7 per cent, at 103.40 yen, after falling one per cent earlier to 103.03 yen, its lowest level Oct 10.

The US dollar was last down 0.2 per cent against the Swiss franc, at 0.9733 franc, after earlier falling about 0.6 per cent to 0.9695, its lowest level in roughly a month.

The US dollar pared losses after the Federal Reserve kept interest rates unchanged in its last policy decision before the US election, but signalled it could hike rates in December as the economy gathers momentum and inflation picks up.

The move in the US dollar was mild, analysts said, because US political uncertainty largely overshadowed the central bank's statement.

The Mexican peso suffered a roughly 1.4 per cent drop against the US dollar. A possible Trump victory has been viewed as a key risk for the Mexican currency given the candidate's promises to clamp down on immigration and rethink trade relations.

"The peso weakening is a reflection of the increase in momentum from the polls favoring Trump," said Mazen Issa, senior currency strategist at TD Securities in New York.

REUTERS