Dollar dips on US election jitters; stocks edge lower

The dollar slipped, demand for gold picked up and stocks edged lower yesterday as investors sought safe havens amid mounting uncertainty about next week’s US presidential election.

US Treasury yields rose as investors awaited the completion of the Federal Reserve’s meeting today, while oil held just above one-month lows following its sharp slide on Monday. The US dollar hit its lowest level in more than two weeks against the euro yesterday on US political uncertainty, while the Mexican peso hit a more than three-week low on positioning for a potential victory for Republican presidential candidate Donald Trump.

A Clinton win is generally seen by analysts as likely to be a positive for the dollar. But news on Friday that the Federal Bureau of Investigation was probing newly found emails related to US Democratic presidential candidate Hillary Clinton’s use of a private server continued to shake traders’ confidence in the outcome of the Nov. 8 election.

“The market has built up some dollar longs and euro shorts in recent weeks, and with Friday’s news increasing the uncertainty around the election outcome, we suspect market participants are cutting back” on those positions, said Vassili Serebriakov, FX strategist at Credit Agricole in New York.

MSCI’s 47-country “All World” index was flat. Asian stocks propped up the index earlier in the session, helped by stronger-than-expected factory activity in China. On Wall Street, stocks edged lower, a day after all three major indexes recorded their worst monthly performance since January. Investors have been cautious due to uncertainty surrounding the election.

Clinton held a five-percentage-point lead over Republican Donald Trump, according to a Reuters/Ipsos opinion poll released on Monday, down only slightly since the FBI said last week it was reviewing new emails in its investigation of Clinton ahead of the Nov 8 election. But a poll by ABC News showed Trump leading by one point and the Los Angeles Times put the Republican candidate more than two points ahead.

“The market is expected to be range-bound until the election results next week,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. The Dow Jones industrial average fell 26.05 points, or 0.14 percent, to 18,116.37, the S&P 500 lost 4.09 points, or 0.19 percent, to 2,122.06 and the Nasdaq Composite dropped 7.34 points, or 0.14 percent, to 5,181.80. — Reuters