SINGAPORE- The US dollar hovered near a one-month high on Tuesday as investors opted for caution in the hours ahead of polls opening on election day in the United States.
Traders are on edge over the result and rather than betting outright on a particular outcome, many have lately flocked to the safety of dollars so that they are well positioned to take advantage of volatility when results arrive.
Against a basket of currencies, the dollar held at 94.050, just below a month-high hit on Monday. The safe-harbor yen has also ground higher in recent weeks and it was steady at 104.75 yen per dollar early in Asia trade.
The risk-sensitive Australian dollar was steady at $0.7054 ahead of a crucial central bank policy meeting where markets expect a rate cut and a shift to quantitative easing.
“We have pared back a lot of our positions,” said Stuart Oakley, a London-based executive at Nomura.
“It’s a bit reckless to position ourselves for one outcome of the election… We’ve positioned ourselves to trade the post (election) volatility.”
Opinion polls have consistently showed Democrat challenger Joe Biden leading President Donald Trump. Analysts said a Biden win could weaken the dollar as he intends to spend big on stimulus, while a steadier foreign policy could lift trade-exposed currencies.
But with battleground states too close to call and with the prospect of either a Trump victory or an inconclusive result likely to support the dollar, moves on Tuesday were slight. – Reuters