FX round-up: US dollar slips as odds of Trump victory rise

Risk aversion picked-up ahead of the US central bank´s policy decision which was due out later in the day, following the results of various polls showing that the US presidential contest would be much more hotly-contested than financial markets had anticipated just a week before.

Key in that respect, the results of a poll released overnight by The Washington Post and ABC News showed US Republican party contender Donald Trump had moved to stand one percentage point ahead of his rival, Hillary Clinton, by a margin of 46% to 45%.

Similarly, Real Clear Politic´s tracking poll showed Clinton´s lead had been whittled down to just 1.7 percentage points.

As of 1547 the US dollar spot index was down 0.41% to 97.30, with cable gaining 0.6% to 1.2314 amid the now heightened polictical uncertainty.

"However, as with the UK referendum, we suspect that the fallout for the markets may not last long, while the direct economic consequences would be limited. [...] For the rest of the world, the implications are clearly negative, but may not be as disastrous as many fear.

"For a start, Trump would probably row back on his most controversial ideas after taking office in January. He will push to renegotiate trade agreements, but will probably stop short of slapping huge tariffs on China and Mexico," said Michael Pearce at Capital Economics.

Euro/dollar was also stronger, gaining 0.58% to 1.1118, although the greenback was 0.93% higher versus the Japanese yen, and changing hands at 103.17, in typical risk-off fashion.

The US dollar was also up against the Mexican peso, gaining 0.67% to 19.33, but flat versus the Canadian dollar at 1.3390.

Nevertheless, the largest gains against the US dollar were those of the kiwi, which was rising by 1.57% to 0.7297.