Early trade in New York: Dollar inches lower, all eyes on US voting

The dollar inched lower ahead of voting in the US presidential election on Tuesday, a sign of last-minute nerves over the chances of a victory for Donald Trump that traders and analysts say would knock several percent off the greenback's value. On Monday, markets had turned away from the Trump-driven "risk-off" plays that have knocked the dollar in the past week as odds on a victory for Democratic candidate Hillary Clinton hardened, helped by an all-clear in an FBI investigation of her use of personal email while serving as secretary of state.
A Trump victory would come as a shock, as the market is pricing in less than a 30 percent chance of that happening. But investors are mindful of the precedent of Britain's referendum on EU membership in June, which confounded the polls by delivering a shock vote for Brexit. More broadly, a Trump victory is expected to drive capital into the perceived security of the Japanese yen and Swiss franc, and to a lesser extent the euro.
"Versus the yen the market pricing is for a 3-4 percent fall on a surprise outcome," said Josh O'Byrne, a currency strategist with US bank Citi in London. Sterling sank by more than 10 percent in the aftermath of Britain's vote to leave the EU. The dollar, steadily on the rise in recent months, dipped just over 2 percent against the basket of currencies that measures its broader strength after a surge for Trump in the polls 10 days ago.
The index was 0.2 percent lower on the day on Tuesday at 97.585. It was steady against the yen and 0.2 percent lower against the euro at $1.1062. Britain's pound, which has gained strongly since a court decision last week against the government's plan to trigger EU divorce proceedings without a vote of parliament, was also up 0.3 percent at $1.2434.