The election polls seemed to have stabilized and so did the fall in the US dollar, at least against the euro. But while polls still see Clinton holding on to her lead, the dollar resumed its slide, especially against the Japanese yen.
USD/JPY is currently trading at 102.70, the lowest level since October 4th, when it surged to higher ground. The honeymoon that markets had with the greenback seems to be gone.
The Federal Reserve took another step towards an interest rate hike in December, but without a clear commitment, as we had at this time last year. Yellen and co. said “the case continued to strengthen” but did not talk about “the next meeting” as a potential for a hike. Nevertheless, this was an “as expected” decision. The FOMC will likely hike if the data continues being good enough (a low bar) and assuming Clinton wins, something they will never say in public.
So, it seems that the move towards the safe haven yen is related to fresh fear of Trump alongside a holiday in Japan, which thinned trading volume during the session. Things could still turn around, at least in EUR/USD.
At the moment, Clinton has a chance of about two-thirds to win the elections according to FiveThirtyEight, the site run by Nate Silver, who correctly predicted almost all state races in 2008 and 2012. The 2016 cycle is more complicated than the previous two.
Here is the chart:
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