By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 2 (Reuters) – The safe-haven yen and dollar rose on Friday after President Donald Trump tested positive for COVID-19, rattling investors just a month before November’s U.S. presidential election.
Data showing U.S. nonfarm payrolls rising less than expected in September, but with a drop in the unemployment rate, had little impact on currencies as markets were more focused on Trump’s health.
Trump, who had played down the threat of the coronavirus pandemic for months, said on Friday he and his wife Melania had tested positive for COVID-19 and were going into quarantine, upending the race for the White House.
The news sparked a sell-off in European stocks, before they pared some of their losses, and on Wall Street.
The yen made its sharpest gain in more than a month to reach a one-week high of 104.95 and was last up 0.3% on the day at 105.27 yen to the dollar JPY=EBS.
Implied volatility gauges for the yen rose to a four-week high of 7.6 vols JPY1MO= over the next month, signaling more choppy trading ahead.
“Trump’s positive COVID test is negative for risk sentiment because there is tremendous uncertainty,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, adding that the 74-year-old president’s health could worsen because of his age, or he could get sympathy votes.
“But until we get clarity, the safe havens will continue to surge,” he added.
Currencies seen as riskier bets fell across the board, with a fall in oil prices also pressuring the commodities-exposed Russian rouble RUB=, South African rand ZAR= and Australian dollar AUD=D3.
Data showing slowing U.S. employment had marginal FX impact, but it underscored the challenges the economy faced as it tries to emerge out