The US dollar fell further on Wednesday, driven by tightening US election race that entered the final phase. Investors shifted their focus to traditional safe-haven instruments, as uncertainty about election rises.
The US dollar index fell to 97.59 low on Wednesday, the lowest level of nearly three weeks and was down 0.14% in Asia, approaching strong technical support at 97.50.
The Euro and Japanese yen were among top winners, with the single currency extending Tuesday’s strong rally, when it rose 0.73% for the day and hit new high at 1.1073, the highest level since 11 Oct.
The dollar was down 0.31% in Asia against Japanese yen, extending strong fall of Tuesday, when the pair was down over 1%.
The downside risk for the dollar rose after recent episode in campaign that weakened position of Hillary Clinton and pushed investors out of dollar. The dollar/yen may fall further if Donald Trump position continues to improve, while alternative scenario suggests that the dollar may return above 105.00 handle if Clinton regains positions she had before the case with FBI.
The latest polls show different numbers, with some showing Clinton’s 5 points lead over Trump, while other polls showed Trump is leading by 1-2 points.
Two key events for the US dollar are scheduled this week, FOMC policy meeting and US Jobs data for October.
Fed is widely expected to keep rates unchanged today, as the policy meeting falls just days ahead of US election, but markets will be looking for comments from FOMC for hints about rate hike in December.
US Non-Farm Payrolls data for October show positive forecast, compared to previous month and will be closely watched for stronger signals of Fed’s rate action in December.
As these two events were overshadowed by US election, even strong numbers on Friday may not have strong impact on a weakening dollar, while weaker jobs results would put the dollar under stronger pressure.
Spot Gold extends overnight rally into early European session, up 0.7% from Wednesday’s opening and approaches psychological $1300 barrier. Fresh dollar’s weakness, triggered by uncertainty about US election, sparked strong appetite for safe-haven instruments, boosting the yellow metal that gained around 1.5% in past few sessions.
Asian shares tumbled to seven-week lows on Wednesday as investors were rattled by signs the U.S. presidential election race was tightening just days out to the Nov. 8 vote.
Markets were beginning to rethink their long-held bets of a victory for Democratic candidate Hillary Clinton amid signs her Republican rival Donald Trump could be closing the gap, forcing money out of riskier assets and into safe-havens.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.3% to seven-week lows, Japan’s Nikkei 225 fell 1.8% and Hong Kong Hang Seng was down 0.45%.
European shares opened lower on Wednesday, following sharp fall on Tuesday, when DAX fell 2.2%; CAC40 was down 1.8% and FTSE100% slipped 0.5% on Tuesday and further weakening expected on Wednesday, as fresh global risk-off mode dents European stock indexes.

Highlights of the day

Asia
Australian Building Approvals missed the forecast heavily in October, with -0.87% release being well
below -3.0% consensus and -1.8% in September. Disappointing data put Australian dollar under
further pressure and pushed the price further away from Tuesday’s fresh high at 0.7687 vs the US
dollar.

Europe
Germany’s jobs figures for October are in focus of European session. The number of unemployed people is expected fall in October, according to -1K forecast, while Unemployment rate is seen unchanged at 6.1%.

UK’s Construction PMI is expected dip in October, on 51.8 forecast against September’s 52.3 release, while EU’s Manufacturing PMI is seen unchanged at 53.3 in October.

America
Key releases for the day come from US, with ADP Non-Farm Employment change is due at 12:30 GMT and forecasted at 165K in October, better than 154K in September. The ADP report is usually used as an indication for US NFP data, due on Friday.
US Crude oil inventories are due at 14:30 GMT, with forecast for build of 1.6 million barrels in the week behind, compared to 0.6 million barrels draw previous week.
FOMC will announce their policy decision on November’s meeting. No changes are expected today but comments from Fed will be closely watched for signals about rate hike action in December.
Announcement is due at 18:00 GMT.

Important levels
GOLD
Spot gold benefits from current political uncertainty ahead of US election and strong risk-aversion that boosted yellow metal. The price is holding near session high at $1297, with psychological $1300 barrier in immediate focus and next targets at $1306/09 eyed.
Initial support lies at $1292, followed by $1287 and $1283.

EURUSD
The Euro remains in steep ascend that touched round-figure resistance at 1.1100, on fresh extension of Tuesday’s strong rally. The pair is looking for next targets at 1.1114 and 1.1157 that also mark strong technical resistances, as fresh strength may extend beyond.
First support lies tat 1.1050, followed by 1.1000 and 1.0958., Market Analysis