FX round-up: Dollar little changed heading into US elections, peso higher

Cable was moderately higher at the tail-end of the week as markets hedged their bets heading into the following week's US presidential elections.

Somewhat ironically, the recent High Court decision, and the possibility that Parliament will finally be given some say over how Brexit proceeds, likely added to Sterling's allure on Friday.

As of 1909 GMT the US dollar index could be seen drifting lower by 0.08% to 97.07 despite a slightly better than expected US employment report for the month of October, while cable was up by 0.41% to 1.2511.

US non-farm payrolls grew by 161,000 in October (consensus: 173,000), but upwards revisions of 44,000 to the prior two months of data offset the negative surprise.

Furthermore, average hourly earnings rose by 0.4% month-on-month (2.8% year-on-year), outpacing forecasts for a rise of 0.3% and 2.6%, respectively.

Commenting on the US jobs report, Barclays Research said: "overall, we believe the wage data and upward revisions to prior months data more than offset the softness in services employment. In our view, this report clears the bar for a December rate hike and represents some of the progress towards the dual mandate that the committee requires."

Worth noting, the US dollar was in fact on its backfoot against Mexico's peso - widely considered to be a barometre - of worries that a trade protectionist such as Donald Trump might become the next resident of the White House.

The US dollar was down by 0.68% to 19.05 pesos.

Levels of FX volatility showed that the Mexican peso had gone a large way towards pricing in a surprise Trump victory.

"FX volatility shows certain assets (e.g. Mexican peso) have gone a long way toward pricing in a surprise Trump victory next week; but other assets, e.g. S&P500, European peripheral bonds, EM equities have not fully priced-in the event," Bank of America-Merrill Lynch's Michael Hartnett said in a research report sent to clients dated 3 November.

Wall Street on the other hand was flirting with a ninth consecutive session of losses for the S&P 500, which would mark the worst such streak since 1980.

On a related note, the latest RealClear Politics tracking poll had US Democratic party presidential candidate Hillary Clinton ahead of her main rival Donald Trump by a margin of 2.7 percentage points.