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Dollar Strengthens as Election Overshadows Market

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Last Tuesday, the dollar strengthens as the upcoming November presidential election eclipses other events in the market.

Latest election-related concerns include FBI’s announcement of re-opening Hillary Clinton’s e-mail case, which involves the presidential candidate unauthorized usage of private e-mail server.

Reserve Bank of Australia and Bank of Japan held a stable policy as anticipated. Australia’s decision increased its dollar strength, whereas Japan’s move had a little shock on yen.

The Australian dollar is buying $0.7647 AUD = D4, which is an increase by five percent from its previous $0.7652. As the pricing of money market is expected to make a slight change in December, the central bank maintains its unwavering 1.5 percent cash rate.

Australia assesses the effects of its August and May cuts. It foresees a potential growth in 2017, claimed by Reserve Bank of Australia.

Bank of Japan was restrained by comparison, but this does not hamper yen from moving. This is in line with dollar climbing higher and recovering from its small losses.

Irrespective of Japan’s cautionary advices on price outlook and reduced inflation forecasts, Bank of Japan waited on stimulus expansion. Investors expected Bank of Japan Governor, Haruhiko Kuroda, in a news conference following the meeting.

The dollar bought 104.85 yen JPY=, which is a slight climb but still needs to draw close on three-month high of 105.54 on Friday.

The presidential election next week will serve as the biggest challenge for investors. Others fear U.S. Federal Reserve may postpone a rate hike following an unexpected result.

CME Group’s FedWatch Tool stated that in December, Fed is expected to raise its rates with a 78 percent probability. This week, there is only a six percent chance of price increase.

The euro slipped to 1.0960 EUR=, which is a 0.2 percent decrease. At 98.467 DXY, dollar index climbed slightly.

Sterling, on the other hand, declined to $1.2230 GBP=D4, a 0.1 percent slip. Nonetheless, this was corroborated by Bank of England Governor Mark Carney’s announcement of his term’s extension until June 2019.

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