Yen Pares Advance After Clinton Tops Trump in Two U.S. Polls

(Bloomberg) -- It took a few fresh polls to reinforce the level of volatility that investors must contend with in the final week before the U.S. presidential election.

After rising in Asia and through the European morning, the yen pared its advance after surveys by the New York Times and ABC News showed Democrat Hillary Clinton leading Republican Donald Trump in the race for the White House by at least two percentage points. The JPMorgan Chase & Co. index of global currency volatility was at 10.39, matching the highest closing level since mid-September.

The Mexican peso, which has tended to weaken when a Trump victory looked more possible, reversed declines against both the dollar and then yen. It was among the biggest losers earlier after a news report saying that the Federal Bureau of Investigation was intensifying its probe into Clinton's use of e-mails, an issue that has dogged her campaign. A Washington Post/ABC News national tracking poll released Wednesday found the race tied at 46 percent.

“This volatility is almost completely led by politics and not economics,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The dollar, a little bit like the pound, has become a bit binary” depending on the latest headlines, she said.

Japan's currency, traditionally bought as a haven asset, was 0.2 percent stronger at 103.15 per dollar as of 8:19 a.m. New York time, after appreciating earlier by as much as 0.7 percent to its strongest level in a month. The peso strengthened 0.2 percent versus the yen, after earlier weakening as much as 0.9 percent.

The Bloomberg Dollar Spot Index was down 0.2 percent. It recovered some of its earlier losses as traders also looked forward to payrolls data due Friday that are forecast to show stronger growth in U.S. hiring. That may reinforce wagers on an interest-rate increase from the Federal Reserve next month.

“It's all U.S. election-related,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “We do get a payrolls tomorrow, and normally that's the be-all and end-all of market expectations. But it's been largely offset by the political machinations.”

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net. To contact the editors responsible for this story: David Goodman at dgoodman28@bloomberg.net, Todd White, Paul Armstrong