FOREX-Dollar gains as risk sentiment cools before U.S. election

    * Graphic: World FX rates in 2020

 (Adds details, updates prices; previous LONDON)
    By Karen Brettell
    NEW YORK, Nov 2 (Reuters) - The U.S. dollar hit one-month
highs against a basket of peers on Monday and expected
volatility in major currencies rose to their highest levels
since April on investor jitters over the outcome of Tuesday’s
U.S. presidential election.
    The dollar has strengthened in the past week as risk
sentiment soured, with investors reducing positions due to
uncertainty over the result.
    “The move we saw last week was a pretty broad derisking and
I think that makes a lot of sense, people are naturally
skeptical about any sort of prognostication with regards to the
election after what happened four years ago,” said Erik Nelson,
a macro strategist at Wells Fargo in New York.
    “The closer the election is the more likely it is to be
delayed or contested and that’s the perfect storm for risk
assets to go down,” Nelson added.
    Democratic challenger Joe Biden leads in national opinion
polls, but the race looks close enough in battleground states
that President Donald Trump could win the 270 Electoral College
votes needed to win.
    Investors are also hesitant to trust polls after the
majority failed to predict Trump’s victory in 2016.
    The dollar index against a basket of currencies was
last up 0.03% at 94.13 after earlier reaching 94.29, the highest
since Sept. 29. The euro dipped 0.11% to $1.1634 and the
greenback climbed 0.09% against the yen to 104.73 yen.
    Expected swings in the major currencies climbed to their
highest since April as investors hedged their exposures before
Tuesday’s vote.
    "Volatility is rising because liquidity for hedges around
the election is very thin. Everyone's the same way, there's no
one selling this stuff thinking everything's great," said Jordan
Rochester, forex analyst at Nomura. Generally, traders are
hedging for decline by the euro and a rise by the dollar.
    One-week implied volatility gauges for the euro
and the yen were both above 11%, their highest since
the beginning of April.
    A surge in global coronavirus cases also weighed on
sentiment, In Europe, new COVID-19 cases have doubled in five
weeks, a Reuters tally showed, with total infections surpassing
10 million.
    The British pound also inched lower after Prime Minister
Boris Johnson announced over the weekend a one-month lockdown
across England.
    Sterling fell to its weakest in two-and-a-half weeks at
$1.2852. It was last trading at $1.2908, down 0.26% on
the day.
    The Federal Reserve will conclude its two-day meeting on
Wednesday. U.S. jobs data for October is also in focus on
    Currency bid prices at 9:41AM (1441 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1634        $1.1647     -0.11%         +3.76%      +1.1656     +1.1623
 Dollar/Yen       JPY=        104.7300       104.6400    +0.09%         -3.79%      +104.9400   +104.5600
 Euro/Yen         EURJPY=     121.84         121.88      -0.03%         -0.09%      +122.1500   +121.7100
 Dollar/Swiss     CHF=        0.9190         0.9167      +0.25%         -5.04%      +0.9197     +0.9152
 Sterling/Dollar  GBP=        1.2908         1.2941      -0.26%         -2.65%      +1.2952     +1.2855
 Dollar/Canadian  CAD=        1.3275         1.3317      -0.32%         +2.23%      +1.3370     +1.3257
 Australian/Doll  AUD=        0.7044         0.7026      +0.26%         +0.33%      +0.7051     +0.6992
 Euro/Swiss       EURCHF=     1.0691         1.0678      +0.12%         -1.48%      +1.0699     +1.0672
 Euro/Sterling    EURGBP=     0.9011         0.8994      +0.19%         +6.59%      +0.9049     +0.8996
 NZ               NZD=        0.6625         0.6616      +0.14%         -1.65%      +0.6634     +0.6590
 Dollar/Norway    NOK=        9.5555         9.5347      +0.22%         +8.85%      +9.6011     +9.5229
 Euro/Norway      EURNOK=     11.1171        11.1100     +0.06%         +13.00%     +11.1708    +11.0904
 Dollar/Sweden    SEK=        8.9183         8.8823      -0.03%         -4.59%      +8.9407     +8.8799
 Euro/Sweden      EURSEK=     10.3750        10.3783     -0.03%         -0.90%      +10.3860    +10.3400

 (Additional reporting by Olga Cotaga in London; editing by
Emelia Sithole-Matarise)