The dollar caught its breath in Asian trading on Thursday, holding above lows hit earlier this week as investors anxiously awaited this weekend’s first round of presidential voting in France. The dollar index, which tracks the U.S. currency against a basket of six major rivals, edged up 0.1 percent to 99.781 , moving away from a three-week low of 99.465 plumbed on Tuesday.
The euro was flat on the day at $1.07140, and was expected to tread water ahead of this weekend’s vote. Centrist Emmanuel Macron held on to his lead as favourite to emerge as the eventual victor, a closely watched poll showed, although it indicated that the outcome of the first round of voting on Sunday was too close to call.
Millions of French voters remain undecided, making this the least predictable vote in France in decades, and raising fears of a potential surprise result that spread turmoil in markets.
Against its perceived safe-haven Japanese counterpart, the dollar was slightly higher on the day at 108.84 yen, pulling away from five-month lows touched on Monday.
“There was a reversal of the recent flight-to-safety trend on Wednesday that we’d been seeing,” said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.
“You can see that reflected in the U.S. yield curve, as rates moved a bit higher after release of the Beige Book,” he said, referring to the U.S. Federal Reserve’s periodic report on the economy.
The Beige Book showed the economy expanded at a modest-to-moderate pace between mid-February and the end of March, but inflation pressures remained in check despite more difficulties in attracting and retaining workers.
The Fed raised its benchmark interest rate in March for the second time in three months. But in recent weeks, weaker-than-forecast data on employment, consumer spending and inflation, as well as geopolitical tension in Syria and North Korea, have prompted investors to trim their expectations for two more hikes this year, according to interest rate futures.
Investors also remain concerned that the administration of U.S. President Donald Trump will be able to pass fiscal or tax reforms any time soon.
Sterling was steady on the day at $1.2845 after notching a more than six-month high of $1.2908 on Tuesday after British Prime Minister Theresa May called for an early general election ahead of Brexit negotiations.