NEW YORK >> The dollar slipped today as investors exited from positions that have benefited from speculation Republican former President Donald Trump is more likely to win the presidential election on Tuesday.

“The Trump trade is unwinding this morning, we’ve seen a big pullback in the likelihood of a Republican sweep as implied by prediction markets and polling,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

Democrat Vice President Kamala Harris has gained in some polls though overall they show a tight race.

Harris has also gained momentum on election gambling sites and leads on PredictIt, while Polymarket continues to show Trump as favorite.

Trump’s policies on tariffs and immigration are seen as likely stoking inflation, which would send longer-dated U.S. Treasury yields and the dollar higher.

At the same time, “tariffs and just sheer uncertainty is expected to harm the outlook for other currencies,” said Schamotta.

The dollar index was last down 0.24% at 103.69. The euro gained 0.6% to $1.0899. The greenback weakened 0.76% to 151.82 Japanese yen.

The one-week implied volatility options for euro/dollar were at the highest since March 2023.

The offshore Chinese yuan also gained 0.53% to 7.102 per dollar while the Mexican peso strengthened 1.49% to 19.992.

These currencies had weakened in recent weeks on expectations they will be hurt by new tariffs under a Trump presidency.

Implied volatility for the yuan is at a record high, while that for dollar/Mexican peso is at the highest since April 2020.

Bitcoin also fell 1.21% to $68,359.

Trump is viewed by analysts as enacting more favorable policies for cryptocurrencies than Harris.

The Federal Reserve is expected to cut rates by 25 basis points at the conclusion of its two-day meeting on Thursday, and investors will focus on any clues that the U.S. central bank could skip a cut in December.

October’s jobs report showed that employers added far fewer jobs than economists had expected, which has raised questions over the degree of softness in the labor market.

Recent hurricanes and labor strikes were partially responsible for the weak job gains.

The report also came after much stronger-than-expected jobs gains in September, which led investors to price for fewer Fed rate cuts.

Traders are now pricing 83% odds the Fed will also cut in December, according to the CME Group’s Fed Watch Tool.

The Bank of England also meets Thursday and is expected to cut by 25 basis points, while the Riksbank is seen easing by 50 basis points and the Norges Bank is expected to stay on hold.

The BoE’s decision has been complicated by a sharp selloff in gilts following the Labour government’s budget last week, which also dragged the pound lower.

The pound was last up 0.39% at $1.2976.

The Reserve Bank of Australia is expected to hold rates steady at its meeting on Tuesday.

The Aussie strengthened 0.67% to $0.6603.