Trump worries hand dollar worst week in 12, jobs data eyed

The dollar inched up from a four-week low on Friday ahead of the U.S. non-farm payrolls report later in the day but was on track for its worst week in 12, pressured by worries that Donald Trump could win next week’s U.S. presidential election.

The greenback has fallen 1.2 percent this week against a basket of major currencies as Democrat Hillary Clinton’s lead over Republican rival Trump in polls has dwindled following the re-emergence of a controversy over her private email server.

The U.S. currency had hit a nine-month high last week as investors bet that the Federal Reserve would hike interest rates later this year, but a Trump victory is seen delaying that hike. Clinton is viewed as a candidate of the status quo, while much uncertainty surrounds Trump’s stance on key issues including foreign policy, trade and the economy.

“No doubt investors will retain a cautious stance today, fearful of fresh polls,” said ING currency strategist Chris Turner, in London. “Where macro does play a role in today’s proceedings, we believe it should be dollar-positive.”

Economists polled by Reuters forecast non-farm employment to have risen by 175,000 in October from 156,000 in September, in data due at 1230 GMT. An upbeat jobs report is expected to bolster bets on a December rate hike, which would typically push U.S. yields higher and support the greenback.

Turner said it would take a headline number of below 75,000 to seriously challenge the market’s conviction of a Fed hike in December, and therefore to knock the dollar.

But politics have trumped economics in foreign exchange markets in recent weeks. Investors are focused on the Nov. 8 election and have paid scant attention to what would normally be key events such as the Fed’s policy decision earlier this week.

“The market is likely to greet a strong payrolls report with a straightforward enough response and bid the dollar higher,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. “But the rise could fade quickly amid the ‘Trump risk’ woes.”

Any rise in the dollar right now will provide an opportunity for participants who have been caught long on the currency and want to square their positions, Ishikawa added.

The dollar was flat at 103.080 yen, having struck a one-month low of 102.55 yen on Thursday. It has fallen 1.6 percent this week against the Japanese currency, with the yen and other perceived safe-havens such as the Swiss franc having benefited from the worries about Trump.