* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Updates prices)
By Karen Brettell
NEW YORK, Nov 2 (Reuters) - The U.S. dollar hit one-month highs against a basket of peers on Monday and expected volatility in major currencies rose to the highest levels since April on investor jitters over the outcome of Tuesday's U.S. presidential election.
The dollar has strengthened in the past week as risk sentiment soured, with investors reducing positions due to uncertainty over the result.
"The move we saw last week was a pretty broad derisking and I think that makes a lot of sense; people are naturally skeptical about any sort of prognostication with regards to the election after what happened four years ago," said Erik Nelson, a macro strategist at Wells Fargo (NYSE: WFC ) in New York.
Democratic challenger Joe Biden leads in national opinion polls, but the race looks close enough in battleground states that President Donald Trump could win the 270 Electoral College votes needed to win. are also hesitant to trust polls after the majority failed to predict Trump's victory in 2016.
"The closer the election is, the more likely it is to be delayed or contested and that's the perfect storm for risk assets to go down," Nelson said.
One-week implied volatility gauges for the euro EUR1WO=R and the yen JPY1WO=R were both above 11%, the highest since the beginning of April.
"Volatility is rising because liquidity for hedges around the election is very thin. Everyone's the same way, there's no one selling this stuff thinking everything's great," said Jordan Rochester, forex analyst at Nomura. Generally, traders are hedging for a decline for the euro and a rise for the dollar.
A surge in global coronavirus cases also weighed on sentiment. In Europe, new COVID-19 cases have doubled in five weeks, a Reuters tally showed, with total infections surpassing 10 million. British pound also weakened after Prime Minister Boris Johnson announced over the weekend a one-month lockdown across England. fell as low as $1.2852 GBP= , the lowest since Oct. 7. It was last trading at $1.2900, down 0.32% on the day.
The Federal Reserve will conclude its two-day meeting on Wednesday. U.S. jobs data for October is also in focus on Friday.
Currency bid prices at 3:00PM (2000 GMT) Description
U.S. Close Pct Change
+104.9400 +104.5600 Euro/Yen
+122.1500 +121.7100 Dollar/Swiss
+0.9152 Sterling/Dollar GBP=
+1.2855 Dollar/Canadian CAD=
+1.3226 Australian/Doll AUD=
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.