* Dollar index hovering at two-month highs
* Polls show race for White House remains close
* Euro under pressure, AUD eyes retail sales
By Ian Chua
SYDNEY, Nov 5 The U.S. dollar hovered around
two-month highs against a basket of major currencies in Asia on
Monday as investors sought the safe-haven currency given
uncertainty surrounding the U.S. presidential election.
Polls show the race for the White House remained close
before Tuesday's election.
A combination of upbeat U.S. jobs figures and data showing
euro zone manufacturing shrank for the 15th month running in
October, also saw investors favour the U.S. currency over the
The single currency slid to $1.2809 first thing
Monday morning, reaching lows not seen since early October. It
last traded at $1.2823, with immediate support at the Oct. 1
trough around $1.2804. That support also represents the bottom
of its $1.2800/1.3200 range seen since September.
Also under pressure, the Australian dollar was last
at $1.0338, having recoiled from a five-week high of $1.0418 set
All that helped underpin the dollar index, which
remained near a two-month peak above 80.610.
"Investors hate uncertainty, so there will be a sigh of
relief when the election is over. Provided there is a clear
election result and no change in the divided Congress, then
traders and investors will see it as 'business as usual'," said
Craig James, chief economist at CommSec.
"If either candidate was to win power and his party gained
control over Congress, then investors would be expected to react
positively," James said, adding the next focus is the U.S.
fiscal cliff issue.
Other key events this week include the Chinese congress that
will usher in a generational leadership change and a European
Central Bank policy meeting.
For the Australian-dollar trader, retail sales data due at
0030 GMT will be closely watched, a day ahead of the Reserve
Bank of Australia's (RBA) interest rate decision.
Most analysts polled by Reuters on Friday expected the RBA
to deliver a follow-up interest rate cut, taking the cash rate
to 3.0 percent, a trough set during the global financial crisis.
"However, higher-than-expected September quarter inflation
means it's a close call as to whether the RBA will cut on
Tuesday or wait till December," said Shane Oliver, head of
investment strategy at AMP Capital.