Investing.com - The dollar eased back from one-month lows against a basket of the other major currencies on Thursday after the Federal Reserve flagged a December rate hike, but uncertainty over the U.S. presidential election continued to weigh.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down 0.10% at 97.30, off lows of 97.08.
The Fed kept interest rates steady at the conclusion of its policy meeting on Wednesday, but indicated that it is on track to raise rates in December.
The announcement was largely in line with market expectations. Few investors had expected a rate hike ahead of the November 8 election.
Polls this week have pointed to an increasingly uncertain outcome for the election.
Many investors have been betting on a victory for Democratic candidate Hillary Clinton, but last week’s announcement that the FBI is to review more emails related to her private email use while she was secretary of state cast fresh uncertainty onto the race.
Investors are currently pricing in a 58.6% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
But analysts have warned that the U.S. central bank could hold off on hiking rates if the election outcome sparks market volatility.
Investors were looking ahead to Friday’s nonfarm payrolls report for October, for fresh indications that the economy is on a strong enough footing to handle an interest rate hike this year.
The yen, which investors often buy during times of market uncertainty, was higher with USD/JPY down 0.44% at 102.85.
The safe haven Swiss franc was near one-month highs, with USD/CHF sliding to 0.9716.
The Mexican peso weakened against the dollar, with USD/MXN up 0.5% to 19.47.
The Mexican currency has been sensitive to developments in the election amid fears that a victory for Republican candidate Donald Trump could damage the country’s economy.
The euro was steady near three-week highs, with EUR/USD at 1.1105.
Sterling moved higher, with GBP/USD rising 0.29% to 1.2341 ahead of the Bank of England’s rate decision and quarterly inflation forecasts, due for release later Thursday.
Separately, the UK high court was to rule on whether Prime Minister Theresa May can start the process of exiting the EU without a parliamentary vote.