* Dollar index rises to one-month high
* Sterling falls to two-week low vs dollar, weaker vs euro
* Australian dollar falls to 3-month low vs US dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds detail, quotes, updates prices)
By Olga Cotaga
LONDON, Nov 2 (Reuters) - Tension grew on Monday before
Tuesday's presidential election in the United States, with
safe-haven currencies like the yen and dollar holding firm.
Expected swings in the major currencies climbed to their
highest since April as investors waited for the outcome of a
election that will have serious implications for the dollar's
outlook over the coming months.
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.
A Biden win is would probably hurt the dollar, on
expectations of a large fiscal stimulus package. A surprise
Trump victory could stoke widespread uncertainty in the short
term.
"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 decline by the euro and a rise by the dollar.
The dollar rose 0.1% versus the Japanese yen to 104.73
JPY=EBS .
One-week implied volatility gauges for the euro EUR1WO=R
and the yen JPY1WO=R were both above 11%, their highest since
beginning of April.
CASES SURGE
A surge in global coronavirus cases continued to weigh on
sentiment, with the euro coming under pressure in recent weeks.
The dollar held its gains after posting the largest weekly
percentage rise since late September in the previous trading
session.
The euro last fetched $1.1648 EUR=EBS , neutral on the day,
having fallen earlier in the session. According to the latest
Commodity Futures Trading Commission data, hedge funds have
reduced their long positions in the euro to the levels last seen
a month ago. EURNETUSD=
The British pound inched lower on coronavirus worries, after
Prime Minister Boris Johnson announced over the weekend a
one-month lockdown across England. Sterling fell to its weakest in two-and-a-half weeks at
$1.2854 GBP=D3 . It was last trading at $1.2919, down 0.3% on
the day.
In Europe, new COVID-19 cases have doubled in five weeks, a
Reuters tally showed, with total infections surpassing 10
million. "The U.S. dollar is continuing to benefit from the
deteriorating outlook for growth in Europe," said Lee Hardman,
currency analyst at MUFG.
Besides the U.S. presidential election, this week is filled
with economic data, including PMI data from the United States,
euro zone and elsewhere, as well as U.S. non-farm payrolls and
Chinese trade.
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