Dollar Falls Against Yen, Gains Versus Mexican Peso on U.S. Vote

The Numbers Don't Lie: Keeping an Eye on the Peso

The dollar fell against the yen for the first time in four days as early results indicated the U.S. presidential election may be a tight race.

A gauge of the U.S. currency dropped as the Associated Press called the first states, with Republican Donald Trump winning Indiana and Kentucky and Democrat Hillary Clinton securing Vermont’s electoral votes. The yen -- considered a haven currency -- initially fell amid reports that Clinton received more early votes than Trump in key swing states. 

The dollar declined 0.4 percent to 104.79 yen as of 9:55 a.m. in Tokyo. Mexico’s peso -- a barometer for investors’ perception on the U.S. vote -- fell 0.4 percent to 18.3948 against the greenback, erasing a 0.3 percent advance. The Swiss franc was up 0.1 percent.

“Trump is ahead in the vote count, even though its only the safe Republican states,” said Janu Chan, a senior economist at St. George Bank Ltd. in Sydney. “The yen and franc are gaining on safe haven demand.”

Japan’s currency, a traditional haven due to its stable government and current account surplus, weakened in the days leading up to the race as Clinton re-established a firmer lead against Trump after the FBI said over the weekend that her handling of e-mails wasn’t a crime. Clinton is seen as a continuity candidate, while Trump is a political novice who has advocated policies such as winding back free-trade agreements that could send jitters across markets.

A Clinton win may pave the way for the Federal Reserve to act as soon as next month, a potential spur for additional dollar gains. Fed funds futures show an 84 percent chance the U.S. central bank will raise rates by year-end, up from 80 percent Monday. The odds are based on the assumption the effective fed funds rate will trade at the middle of the new Federal Open Market Committee target range after the next increase.

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