The dollar fell against the majority of its 16 most-traded peers as voters headed to the polls to decide whether President Barack Obama or challenger Mitt Romney will guide the world’s biggest economy for the next four years.
The U.S. currency touched an eight-week high against the euro before the world learns which candidate will help shape policy ranging from the Federal Reserve chairmanship to the so-called fiscal cliff of more than $600 billion in tax increases and spending cuts set to take effect in 2013. Australia’s dollar gained against all of its major counterparts after the central bank unexpectedly refrained from cutting interest rates today.
“The dollar is weakening a little bit across the board,” Sebastien Galy, a senior foreign-exchange strategist based in New York at Societe Generale SA, said in a telephone interview. “It remains gentle because we do have this election coming, but it is the thought that people want to position themselves short the dollar and long emerging markets.”
The dollar declined 0.1 percent to $1.2816 per euro at 9:21 a.m. New York time after appreciating to $1.2764, the strongest level since Sept. 11. The U.S. currency was little changed at 80.26 yen. The euro gained 0.1 percent to 102.85 yen.
A national poll conducted by the Pew Research Center Oct. 31-Nov. 3 showed Obama leading Republican challenger Romney, 48 percent to 45 percent. The survey showed them tied at 47 percent a week ago. The final tracking poll by ABC News and the Washington Post had the Democratic incumbent taking a lead of 50 percent to 47 percent in a survey of 2,345 likely voters conducted Nov. 1-4.
Dollar Index
The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major trading partners, fell 0.1 percent to 80.65 after gaining during the previous four days.
Romney has said he disagrees with the Fed’s measures to stimulate the economy and would replace Chairman Ben S. Bernanke. A win by Obama, who leads in some polls, would signal continued dovish central-bank policy, Galy said.
“It’s a low-yield environment,” he said. “That means the search for yield continues, and especially in places that are going to benefit from Fed easing. That would be, for example Mexico. That would be, to a lesser extent, Canada.”
The euro fell against most of its major counterparts as Greek Prime Minister Antonis Samaras struggled to get the members of three-party coalition to support a package of further austerity measures, which will be voted on as soon as tomorrow.
“All this uncertainty that continues to linger is proving to be quite damaging for the euro,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt. “It’s difficult to see how we can get out of this quickly.”
Spain said yesterday it is working on a review of income and spending in its welfare system as it heads toward a deficit. The country is relying on European aid for its banks and potentially seeking more to shore up its public finances.
German factory orders fell the most in a year in September, the Economy Ministry in Berlin said today. Orders, adjusted for seasonal swings and inflation, slumped 3.3 percent from August, when they dropped a revised 0.8 percent.
“The euro is being sold as the market focuses on the risks surrounding Greece and Spain,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “German data have been weakening and there are concerns the country may fall into a recession. You can’t buy the euro in the current environment.”
Aussie Gains
The dollar has gained 0.8 percent over the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro and yen each declined 1.3 percent.
Australia’s currency rose to a five-week high against the dollar after Reserve Bank of Australia Governor Glenn Stevens and his board left the overnight cash-rate target at 3.25 percent. Twenty of 27 economists surveyed by Bloomberg forecast a cut to 3 percent.
“The RBA was expected to potentially cut rates today and they didn’t,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “As a result, the Aussie dollar rallied.”
The so-called Aussie advanced 0.7 percent to $1.0436 after rising to $1.0445, the strongest since Sept. 28. The currency gained 0.6 percent to 83.69 yen.
