Dollar Remains Weaker in Countdown to Last Clinton-Trump Debate

  • Mexican peso is steady after gaining to six-week high
  • Australian dollar weakens after surprise drop in employment

A gauge of the dollar held a three-day drop, while the Mexican peso touched its strongest in six weeks before the last presidential debate begins in Las Vegas.

The U.S. currency declined against all but three of its 16 major peers since Oct. 14 when Federal Reserve Chair Janet Yellen laid out an argument for keeping monetary policy loose without taking an interest-rate increase off the table. Mexico’s peso, considered a barometer for currency-market views on Republican candidate Donald Trump’s chances, has strengthened 2.7 percent this week. Trump may try another wild-card play in his third and final debate with Hillary Clinton in perhaps his last chance to reverse his Democratic rival’s electoral strength.

“The U.S. dollar may be more influenced today by the outcome of the final U.S. presidential debate between Hillary Clinton and Donald Trump,” Elias Haddad, a senior currency strategist in Sydney at Commonwealth Bank of Australia, wrote in a note Thursday. “Judging from Donald Trump’s trade rhetoric, particularly against Mexico, there has been a strong link between the odds of Trump winning the U.S. presidential election and Mexican peso.”

Dollar’s Retreat

The Bloomberg Dollar Spot Index, which measures the U.S. currency against 10 major counterparts, was little changed as of 9:43 a.m. in Tokyo, after declining 0.6 percent in the previous three days. It touched a seven-month high on Oct. 13 on speculation the Fed was getting closer to raising interest rates. The greenback advanced 0.2 percent to 103.61 yen and was at $1.0971 per euro from $1.0974 in New York.

The Mexican currency was little changed at 18.5169 per dollar after gaining to 18.5065, the strongest since Sept. 8.

Swaps traders are pricing about a 64 percent probability that the U.S. central bank will raise interest rates by December, down from 66 percent at the end of last week. The Bloomberg U.S. ECO surprise index -- which measures whether economic data have exceeded or fallen short of analysts’ estimates -- fell below zero this week for the first time in two weeks.

The Australian dollar slid 0.1 percent to 77.13 U.S. cents after employment unexpectedly contracted in September.

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