Dollar dips during election rush

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IOL pic nov6 market arrows . Photo: Filomena Scalise

New York - The dollar slipped against most other major currencies in light trade on Tuesday amid a US presidential election dominated by concerns about the world's largest economy.

Americans streamed to polling stations to have their say on President Barack Obama and Republican challenger Mitt Romney in their close-fought battle for the White House.

At 22h00 GMT, the euro fetched $1.2814, up from $1.2791 at the same time on Monday. Earlier it had fallen to $1.2764, its lowest level since September 11.

The European unit also rebounded against the Japanese currency, hitting 102.96 yen after trading at 102.69 yen late on Monday, while the dollar rose to 80.34 yen from 80.28 yen.

“The US dollar is lower overall with markets calm and as the US presidential election takes place today,” said Nick Bennenbroek at Wells Fargo Bank.

The analyst warned that a recent more favourable trend for equity markets and foreign currencies may not last too long, pointing to the looming so-called US fiscal cliff, government spending cuts and tax hike measures due to take effect on January 1 unless politicians find a compromise on reducing budget deficits.

“Past experience suggests those budget talks will be challenging and that markets may be entering a more uncertain phase - an environment that would be negative for equities, but positive for the US dollar and yen,” Bennenbroek said.

Christopher Vecchio, currency analyst at DailyFX, said the US election would have little impact on the US dollar over the coming days though there could be some additional volatility on Wednesday.

Vecchio said that attention would quickly shift to the European Central Bank meeting on Thursday, “considering that Spain has continued to drag its feet with respect to a bailout”.

The ECB meeting looks unlikely to bring any policy changes, observers said.

The dollar dipped against the Swiss currency, to 0.9428 francs from 0.9435 francs late on Monday.

The greenback fell against the British pound, which rose to $1.5999 from $1.5977. - Sapa-AFP

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