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FOREX-Dollar inches lower on US election jitters, BOJ decision awaited

Published 01/11/2016, 11:30 am
FOREX-Dollar inches lower on US election jitters, BOJ decision awaited
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* BOJ widely expected to hold policy steady after 2-day meeting

* Clinton email investigation adds to concerns ahead of election, pressure dollar

* U.S. election looms over Fed meeting, BoE, U.S. jobs data

TOKYO, Nov 1 (Reuters) - The dollar edged lower on Tuesday as the final days of the contentious U.S. presidential campaign overshadowed other major market events, as investors weighed the latest concerns about an FBI investigation into Hillary Clinton's use of a private email server.

Clinton held a five percentage point lead over Republican rival Donald Trump, according to a Reuters/Ipsos opinion poll released on Monday, down only slightly since the FBI said last week it was reviewing new emails in its investigation of the former secretary of state ahead of the Nov. 8 election. Clinton is viewed as the status quo candidate for markets, the news weighed on the dollar and nudged it away from highs hit on growing expectations that the U.S. Federal Reserve will raise interest rates in December.

The greenback inched down against the yen ahead of the outcome of a two-day Bank of Japan meeting later in the session, at which policymakers were widely expected to stay the course after a major policy overhaul last month.

BOJ Governor Haruhiko Kuroda is likely to signal in his post-meeting news conference that while the pace of the BOJ's bond buying could fluctuate in the future, the central bank won't sharply reduce its bond purchases any time soon. dollar was buying 104.74 yen >JPY=>, down 0.1 percent on the day but not far from Friday's three-month high of 105.54. It still gained more than 3 percent for the month of October, even after paring those gains on the news of the Clinton email developments.

"The market is not really responding sensitively to U.S. political events since Friday, so the dollar/yen is stuck ahead of 105," said Masafumi Yamamoto, chief FX strategist at Mizuho Securities in Tokyo.

"We have to keep an eye on political and economic events in the U.S.," he said. "People are still pricing in the victory of Secretary Clinton, and a U.S. rate hike in December."

The U.S. Federal Reserve will conclude a two-day meeting of its own on Wednesday. Markets see only a small chance that it will raise rates before the election, but traders will be scouring its statement for clues as to the timing of its next interest rate increase.

Markets were pricing in around a 78 percent chance the Fed will raise rates in December, but just a 6 percent chance of a hike this week, according to the CME Group's (NASDAQ:CME) FedWatch Tool.

On Friday, the October U.S. employment report will also be scanned for the latest reading on whether labour conditions are improving enough for the Fed to act. Employers are expected to have added 175,000 jobs in the month according to the median estimate of 100 economists polled by Reuters. ECONUS

The euro edged down 0.1 percent to 1.0971 EUR= .

Sterling was slightly lower at $1.2235 GBP=D4 but underpinned by news that Bank of England Governor Mark Carney said he would stay in his job for an extra year, until the end of June 2019. Bank of England will meet on Thursday.

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