The dollar weakened as futures showed a reduced likelihood of a Federal Reserve interest-rate increase this year after the Federal Bureau of Investigation said it’s reopening an inquiry into Hillary Clinton’s use of private e-mail while secretary of state.
The greenback fell against most major peers as the chances for the Fed to tighten monetary policy by December dropped to 69 percent, from 74 percent earlier Friday, according to fed funds futures data. The U.S. currency is still on track for the fourth week of gains, its longest winning streak since May.
The politically explosive development less than two weeks before the presidential election extended the dollar’s losses against the euro and the yen. The greenback strengthened against the Mexican peso, with the pair viewed as a gauge of the likelihood of Republican candidate Donald Trump beating Democrat Clinton.
“This could weigh on the U.S. dollar into the election certainly, but that’s dependent on what we hear from the FBI,” said Bipan Rai, a senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce in Toronto. “At the very least, we now have another variable to factor in that we had priced out before — political risk.”
The Bloomberg Dollar Spot Index, which measures the U.S. currency’s performance against a basket of 10 major counterparts, fell 0.3 percent at 3:11 p.m. in New York, leaving its weekly gain at 0.2 percent. The gauge is up 2.2 percent this month.
The dollar rose earlier Friday as data showed U.S. economic growth picked up in the third quarter after an uninspiring first half of the year. The currency extended an advance that began in August as signs of economic expansion and accelerating inflation increased the chances for monetary tightening.
The 2.9 percent annualized increase in U.S. gross domestic product followed a 1.4 percent gain the prior quarter. The median forecast in a Bloomberg survey called for a 2.6 percent growth rate.
FBI Director James Comey, in a letter to eight committee chairmen in Congress, said he can’t say how long the agency’s review would take — raising the possibility that Clinton could go into Election Day with the new probe unresolved and still hanging over her campaign.
“The market will be concerned that this tips the balance of risks towards Trump again,” said Shaun Osborne, chief foreign-exchange strategist in Toronto at Bank of Nova Scotia. “I don’t think the market necessarily believes this means Trump will win, but it raises the level of uncertainty significantly.”
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