The euro extended an early jump to be up 0.6% at $1.0901, while the dollar declined 0.9% on the yen to 151.60
The dollar slipped in Asia on Monday as investors braced for a potential pivot this week for the economy as the US chooses a new leader, and as it likely cuts interest rates again with major implications for bond yields.
The euro extended an early jump to be up 0.6% at $1.0901 and looked set to test resistance around $1.0905. The dollar declined 0.9% on the yen to 151.60. The dollar index dropped 0.3% to 103.63.
Treasury futures rallied 12 ticks, recovering some of the losses suffered on Friday.
Democratic candidate Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls and the winner might not be known for days after voting ends.
Dealers said the early dip in the dollar might be linked to a well-respected poll that showed Harris taking a surprise 3-point lead in Iowa, thanks largely to her popularity with female voters.
Since last week, Harris is seeing a boost in the polls, highlighted by the Selzer Poll of Iowa where some are using as a proxy for performance among the Blue Wall battleground states, JPMorgan analysts said in a note.
Betting site PredictIT showed Harris at 54 cents to Trump on 52 cents – what investors are willing to wager for a chance to win $1 – compared to 42 cents to 61 cents just a week ago.
It is widely considered that a Trump win will be positive for the dollar, though many feel this outcome has been discounted, said Chris Weston, a Pepperstone analyst. A Trump presidency with full control of Congress could be most impactful, as one would expect a solid sell-off in Treasuries resulting in a spike higher in the dollar.
A Harris win and a split Congress would likely result in ‘Trump trades’ quickly reversed and priced out, he said. The dollar, gold, bitcoin and U.S. equity would likely head lower.
