NEW YORK - The dollar was little changed to slightly lower on Friday, moving in narrow ranges as investors trimmed positions ahead of next week's U.S. presidential election, although sentiment remained cautious with the continued surge in global coronavirus cases that has forced lockdowns in parts of Europe.
The greenback was on track to post its largest weekly percentage gain since late September, with investors scooping up dollars amid fears of a contested election and the economic impact of renewed lockdowns in France, Germany and some regions of Spain.
"The risk tone in markets is mixed as the week comes to an end with global equities still unsettled from new lockdowns announced in Europe, while bracing for what may be a contested U.S. election result next week," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
In mid-morning trading, the dollar index was slightly down at 93.85. On the week, the index was up 1%, on pace for its best weekly performance in more than a month.
"It is also month-end today. Our month-end models basically show a backdrop that would favor a slightly weaker dollar," said Mazen Issa, senior currency strategist, at TD Securities in New York.
"The rebalancing flows more or less favor the euro and other European currencies," he added.
The euro was slightly up at $1.1680, but not far from its four-week low of $1.1650. The euro remains pressured overall after the European Central Bank on Thursday flagged further monetary easing in December.
FX volatility gauges for euro-dollar and most other major currencies are now at their highest since March
"We opened up pretty risk-adverse but now things seem to have settled down," said Societe Generale's Kit Juckes, though he also flagged another heavy tumble for Turkey's lira where worries of a full-blown currency crisis remain.
If the next week's election result is contested by either Donald Trump or Joe Biden, or the result divides the Senate and the House of representatives between the two parties, safe-haven currencies are almost certain to gain, Saxo Bank's head of FX strategy John Hardy said.
The greenback was little changed against the Japanese yen at 104.64 yen, after rallying overnight from a five-week trough as it benefited from a rebound in U.S. Treasury yields and broad dollar buying.
Some commodity currencies, meanwhile, took another spill on Friday, capping what for some was set to be their worst week since the March COVID collapse.
With Brent already down 10% for the week and still on the slide, traders seemed ready to sell anything linked to crude.
Russia's rouble dropped 0.5% to near 80 per dollar on course for a 4% weekly drop. Norway's crown NOK= had managed to steady at 9.57 per dollar but only after a near 3.5% weekly skid, while Canada's dollar was facing its worst week since April.
Against the Chinese yuan in the offshore market, the dollar fell 0.3% to 6.6906 yuan.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Marc Jones in London; Editing by Kirsten Donovan) ((email@example.com; 646-301-4124; Reuters Messaging: rm://firstname.lastname@example.org))