Dollar Posts Longest Losing Streak Since July on Election Angst

(Bloomberg) -- The dollar weakened for a fifth day, its longest stretch of losses in four months, and a gauge of currency volatility rose to near the highest in two months amid mounting anxiety over the outcome of the U.S. presidential election.

A JPMorgan Chase & Co. index of global currency swings touched 10.39 Wednesday, the highest level since Sept. 14, as the race for the White House between Democratic nominee Hillary Clinton and Republican candidate Donald Trump tightened less than a week before Americans head to the polls. The greenback fell Thursday against the British pound, which surged the most since August after a U.K. court ruled the government must hold a vote in Parliament before starting the two-year countdown to Brexit.

"Politics is clearly asserting itself as the biggest driver in global markets," said Alan Ruskin, global co-head of foreign-exchange research in New York at Deutsche Bank AG. Traders are either "selling the dollar or taking back long dollar exposure. It's extraordinary how much the narrative has shifted."

With many still haunted by the U.K.'s surprise vote in June to exit the European Union, traders in the $5.1 trillion-a-day currency market are hedging against an unexpected win by Trump. Clinton's odds of victory have fallen to 66 percent, according to poll aggregator FiveThirtyEight, from 82 percent a week ago. Clinton's narrowing lead has extended the greenback's loss this year to 2.9 percent on investor concern that Trump, who is perceived to be more unpredictable than his Democratic rival, would be likely to upend U.S. trade agreements.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.4 percent as of 5 p.m. in New York.

"We're going to go on focusing on every twist and turn of the election campaign and on every small move in the polls," Kit Juckes, a global strategist at Societe Generale SA in London, wrote in a note published Thursday. "The dollar is getting no help as pre-election nerves dominate the market mood."

--With assistance from Narayanan Somasundaram and Lilian Karunungan To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Michael Aneiro