Dollar falls broadly due to risk on sentiment despite U.S. election uncertainty

The greenback fell across the board and hit 2-month month low on Friday as investors awaited the results of the U.S. Presidential election and on concerns that a potentially Republican controlled Senate would make it difficult to pass a larger coronavirus relief package, however, market risk-on sentiment drove the dollar lower.    
Reuters reported U.S. employers hired the fewest workers in five months in October, offering the clearest evidence yet that the end of fiscal stimulus and exploding new COVID-19 infections were sapping momentum from the economic recovery.  
  
Nonfarm payrolls increased by 638,000 jobs last month after rising by 672,000 in September, the Labor Department said in its closely watched employment report on Friday. That was the smallest gain since the jobs recovery started in May and left employment still well below its peak in February.    
The unemployment rate fell to 6.9% from 7.9% in September. Economists polled by Reuters had forecast payrolls advancing by 600,000 jobs in October and the jobless rate dipping to 7.7%.  
  
Versus the Japanese yen, dollar met renewed selling at 103.76 in Asian morning and dropped to an intra-day low at 103.18 in Europe before staging a rebound to 103.71 in New York morning after the release of U.S. jobs report. The pair then retreated again to 103.20 in New York, price last traded at 103.33 near the close.  
  
Although the single currency dropped to session lows at 1.1796 in Asian morning, price erased its intra-day losses and rallied to a 2-week high of 1.1890 at New York open on usd's broad-based weakness before retreating to 1.1852 on profit-taking. Euro swiftly erased intra-day loss and climbed back to 1.1889.  
  
The British pound gained to 1.3157 in Australia before retreating to 1.3113 in Asia, then 1.3102 in European morning. Cable then dropped to session lows at 1.3094 in New York morning before rising to a 2-week high at 1.3177 in New York on usd's weakness together with cross-selling of sterling especially vs euro.  
  
In other news, Reuters reported Bank of England Deputy Governor Ben Broadbent said on Friday that policymakers had to consider whether negative interest rates might have counterproductive effects during times of stress on banks' balance sheets.    In such a scenario, there could be a risk that banks would cut lending to make up for costs and lower margins due to negative interest rates, Broadbent said.     "Then the question is: are those pressures enough to mean that these mitigating effects - the downside risks of cutting rates below zero - outweigh the benefits?" Broadbent said in a presentation organised by regional agents of the central bank.  
  
On the data front, Reuters reported U.S. wholesale inventories were higher than initially estimated in September as sales barely rose, government data showed on Friday.    The Commerce Department said wholesale inventories gained 0.4% in September, instead of dipping 0.1% as estimated last month. Stocks at wholesalers increased 0.5% in August. The component of wholesale inventories that goes into the calculation of gross domestic product rose 0.4% in September.    Inventories were down 3.9% in September from a year earlier.  
  
Data to be released this week :  
  
Japan coincident index, leading indicator, Swiss unemployment rate, Germany exports, imports, trade balance, current account, EU Sentix index and Canada leading index on Monday.  
  
New Zealand retail sales, Japan current account, trade balance, Economy Watchers outlook, Economy Waters current, UK BRC retail sales, claimant count, ILO unemployment rate, employment change, average weekly earnings, Australia NAB business conditions, NAB business confidence, China PPI, CPI, France ILO unemployment rate, industrial output, Italy industrial output, Germany ZEW economic sentiment, ZEW current conditions, EU ZEW survey expectations, and U.S. redbook, JOLTS job openings on Tuesday.  
  
Australia consumer sentiment, New Zealand RBNZ interest rate decision, Japan machine tool orders, France market holiday, UK NIESR GDP estimate, U.S. MBA mortgage applications, market holiday, and Canada market holiday on Wednesday.  
  
Japan corporate goods price index, machinery orders, tertiary industry activity, Australia consumer inflation expectation, UK RICS housing price balance, GDP, industrial output, manufacturing output, construction output, trade balance, GDP, Germany CPI, HICP, EU industrial production, U.S. core CPI, CPI, real weekly earnings, initial jobless claims, continued jobless claims, Federal budget and Canada new housing price index on Thursday.  
  
New Zealand manufacturing PMI, food price index, Swiss producer and import price index, France CPI (EU norm), CPI, EU employment change, trade balance, GDP, and U.S. PPI, core PPI, University of Michigan sentiment on Friday.