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

SINGAPORE (Reuters) – The dollar jumped and the safe-haven yen hit its highest level of the week on Friday after U.S. President Donald Trump said he tested positive for COVID-19 and entered quarantine.

George Washington is seen with printed medical mask on the one Dollar banknotes in this illustration taken, March 31, 2020. REUTERS/Dado Ruvic/Illustration

The news could cause a new wave of market volatility as investors brace for the hotly-contested presidential election in November.

The greenback rose about half a percent on the risk-sensitive Australian and New Zealand dollars, while the yen was up roughly 0.3% at 105.27 per dollar, its highest since Monday.

The euro fell 0.3% to $1.1716.

The yen made even larger gains against other currencies, amid a broad shift out of riskier assets and commodities. Volumes in Asia were lightened by holidays in China.

Trump said on Twitter that he and his wife Melania tested positive for the coronavirus and would quarantine.

Analysts said this could upend the campaign, but that the medium-term implications for currencies were not immediately clear.

“It has the potential to reduce Trump’s campaigning ability,” said Sean Callow at Westpac.

“It’s also hurts him as far as the whole narrative that it’s really not much to worry about – it puts the COVID crisis itself back front and centre…But does it shift polls? I just don’t know.”

The Australian dollar was last at $0.7144 and the kiwi at $0.6629. Against a basket of six major currencies the dollar rose 0.2% to 93.899.

Investors had already been on edge on signs that a hoped-for U.S. fiscal stimulus package was stalled in Washington, and after a spate of data, including jobless claims and consumer spending, suggested that the plodding U.S. economic recovery could be losing steam.

“What this does say is that the