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Published: Thu, November 03, 2016
Economy | By Melissa Porter

US Dollar Lower Against Majors But Rising Against MXN

US Dollar Lower Against Majors But Rising Against MXN

LONDON, Nov 2 (Reuters) - The dollar slumped and the Swiss franc and Japanese yen surged on Wednesday as investors anxious by the prospect of a Donald Trump victory in next week's USA presidential election sought out safe havens for their money.

The U.S. dollar surrendered gains to trade little changed against a basket of major currencies on Monday on renewed concerns about how an Federal Bureau of Investigation probe into Hillary Clinton's use of a private email server might the impact on the U.S. presidential election.

The dollar index.DXY, which measures the greenback against a basket of six major rivals, fell about 0.4 percent to 97.26, its lowest since October 11.

Heavy selling also knocked the Mexican peso MXN=D2 , seen as the most vulnerable to a Trump presidency due to his pledge to build a wall along the USA border with its neighbor to prevent entry of illegal immigrants, and other proposals including slapping tariffs on Mexican imports.

On Tuesday morning, Mexico's peso was selling on average at 19.45 per dollar in banks.

Investors have tended to see Clinton as the candidate of the status quo, while there is greater uncertainty over what a victory Trump might mean for USA foreign policy, Global trade deals and the domestic economy.

Weakness on Wall Street, on the heels of falling Asian and European stocks, sent MSCI's 47-country "All World" index.MIWD00000PUS down 0.65 percent, close to a four-month low.

USA crude slid 0.5 percent to $48.44 a barrel on Monday, up 0.4 percent for the month, while global benchmark Brent retreated 0.5 percent to $49.44, up 0.8 percent in October.

The yen, driven lower in the past month as investors abandoned long-term bets on it strengthening past 100 yen per dollar, gained more than half a percent to hit its highest since October 21. "Markets are trying to factor in the changing atmosphere", said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

While Clinton held a five-percentage-point lead over Trump, according to a Reuters/Ipsos opinion poll released on Monday, some other polls showed her Republican rival ahead by 1-2 percentage points. On Friday, it hit a three-month peak after third-quarter US economic growth beat expectations, before ending the day down 0.4 percent on the news about the Clinton email investigation.

Benchmark 10-year notes US10YT=RR were up 6/32 in price to yield 1.80 percent, down from 1.82 percent late Tuesday.

The dollar was little changed at 104.86 yen early on Monday after falling 0.4 percent on Friday.

"Recent sharp falls in sterling's value vis-à-vis the euro and the USA dollar could reduce confidence in sterling and eventually threaten its role as a global reserve currency", said Standard and Poor's, which reviewed the UK's credit rating on Friday.

That largely seems the product of the potential for investors to take risk off the table, as they were on Wednesday, as well as the prospect that any blip on markets globally might cause the Federal Reserve to put an interest rate rise on hold.

While traders do not expect the central bank to raise interest rates just a week ahead of the presidential election, they are looking for signs that the Fed is set to hike rates in December.

US stocks stayed weak in choppy trading after the Federal Reserve kept interest rates unchanged but signalled it could hike in December.

Crude oil prices slumped hard after U.S. Energy Information Administration data showed U.S. crude stockpiles rose sharply last week as refineries cut output.

Brent crude was down 3.14 percent at $46.63 a barrel, while USA crude was down 3.2 percent at $45.17.

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