The dollar clawed back some ground against its major peers on Friday ahead of the US non-farm payrolls report later in the day, but remained captive to jitters over a tightening US presidential election race. The dollar index edged up 0.1 percent to 97.244, pulling away from a three-week low of 97.041 seen overnight. The index had hit a nine-month high above 99.00 last week on enhanced prospects of the Federal Reserve hiking interest rates later this year.
But it was on track to fall about 1.2 percent this week as Democrat Hillary Clinton's lead over Republican Donald Trump in the polls has appeared to dwindle following the re-emergence of a controversy over her private email server. Clinton is viewed as a candidate of the status quo, while there is much more uncertainty over Trump's stance on key issues including foreign policy, trade and the economy.
"Participants are not responding very much to reports that suggest Clinton is ahead in some battleground states. Emotions has the edge over logic right now," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo. The currency market has focused on the November 8 election and having paid scant attention to key events like the Fed's policy decision earlier in the week. But the US non-farm payrolls report later on Friday could impact expectations of a December Fed rate hike. The dollar inched up 0.1 percent to 103.080 yen, having clawed higher from a one-month low of 102.55 struck overnight.
It has fallen 1.6 percent this week from well above 105.00 as polls showed Trump was closing the gap with Clinton and even pulling slightly ahead in a few states. The yen, along with other perceived safe-havens like the Swiss franc, has benefited this week as Trump risk jitters have created a risk off mood in the global markets. The euro was down 0.1 percent at $1.1092, having pulled back from a three-week high of $1.1126 touched the previous day.
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