A picture illustration shows Euro and U.S. dollar banknotes in Sarajevo March 9, 2015. REUTERS/Dado Ruvic
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Traders wanting to know what November's U.S. presidential election will mean for the dollar need look no further than the U.K. The pound plunged to a seven-year low and volatility soared, exceeding all other Group-of-10 nations, on risks created by a referendum on European Union membership. Given the tough talk on dollar strength from candidates vying for the White House, the greenback is just as vulnerable to politics, according to Deutsche Bank AG, JPMorgan Chase & Co. and Standard Bank Group Ltd.Republicans and Democrats have each accused China of purposely weakening its currency to gain a trade advantage, reflecting voter unease linked to a 14 percent slide in manufacturing jobs during the past decade. Steven Barrow at Standard Bank warns of a "prevote wobble" for the dollar – reminiscent of the pound's response to Brexit – and a 20 percent slide for the greenback within months if Donald Trump were to win the White House.Sterling volatility jumped by the most since 1998 on March 23, precisely three months before the vote.Dollar-yen volatility has climbed an average 1.6 percentage points in the three months before presidential elections over the past two decades, options prices show.
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