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US$ holds above lows as election approaches

US$ holds above lows as election approaches

LONDON – The dollar nudged up from a six-month low against the yen yesterday as investors sought bargains after its recent sell-off, but uncertainty about the outcome of the US presidential election capped its recovery.

A close race between US President George W. Bush and Democratic Senator John Kerry has heightened worries that deciding the winner of tomorrow’s election could drag on as it did in 2000, encouraging investors to stay relatively light of dollar positions. US payrolls data on Friday could also be crucial for the dollar, which was trading less than two cents from record lows against the euro hit earlier this year.”It’s difficult to see the dollar recovering much this week with elections the main focus and payrolls after that,” said Mitul Kotecha, head of global currency research at Calyon in London.”The polls show the election is extremely close and a plethora of legal challenges could weigh on the dollar.”At 0835 GMT, the dollar fetched 106,30 yen, up half a percent on the day but still within striking distance of six-month lows around 105,75 hit on Friday.The dollar was little changed against the euro at US$1,2780, less than a cent away from last week’s eight-month low of US$1,2841 and less than two cents away from its record low of US$1,2927 hit in February.A Reuters poll on Sunday showed that Bush and Kerry both had 48 per cent of the vote.Analysts said the neck-and-neck race was discouraging many market players from betting on who the next US president would be and that any glitches in the voting process, like those seen in the 2000 election, could weigh on the dollar.”If there is any confusion or disruption with the election process, there’s a big possibility that there will be some dollar selling,” said Shogo Nagaya, forex manager at Nomura Trust and Banking.At the same time, some believe the dollar would be dented by a Kerry win, for reasons ranging from political instability due to a change in government to speculation that he could take measures that would stifle the stock market.-Nampa-ReutersUS payrolls data on Friday could also be crucial for the dollar, which was trading less than two cents from record lows against the euro hit earlier this year.”It’s difficult to see the dollar recovering much this week with elections the main focus and payrolls after that,” said Mitul Kotecha, head of global currency research at Calyon in London.”The polls show the election is extremely close and a plethora of legal challenges could weigh on the dollar.”At 0835 GMT, the dollar fetched 106,30 yen, up half a percent on the day but still within striking distance of six-month lows around 105,75 hit on Friday.The dollar was little changed against the euro at US$1,2780, less than a cent away from last week’s eight-month low of US$1,2841 and less than two cents away from its record low of US$1,2927 hit in February.A Reuters poll on Sunday showed that Bush and Kerry both had 48 per cent of the vote.Analysts said the neck-and-neck race was discouraging many market players from betting on who the next US president would be and that any glitches in the voting process, like those seen in the 2000 election, could weigh on the dollar.”If there is any confusion or disruption with the election process, there’s a big possibility that there will be some dollar selling,” said Shogo Nagaya, forex manager at Nomura Trust and Banking.At the same time, some believe the dollar would be dented by a Kerry win, for reasons ranging from political instability due to a change in government to speculation that he could take measures that would stifle the stock market.-Nampa-Reuters

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