By Tom Westbrook
SINGAPORE (Reuters) - The dollar took stock at the end of a poor week on Friday, having shed about a cent against the euro and suffered its largest weekly drop against the yen in a month, as investors began to wager on a Biden presidency and big U.S. stimulus.
Daily moves were slight and mostly in the dollar's favour early in the Asia session as traders awaited the final U.S. presidential debate, which begins at 0100 GMT.
Markets could be sensitive to any vote-shifting moments as campaigning hits fever pitch ahead of polling day on Nov. 3.
The dollar has lifted from Wednesday's seven-week low against a basket of currencies (=USD), but still sits about 0.8% lower for the week and in the bottom half of a monthslong range.
Persistent hopes that Congress might pass a stimulus package before the election and confidence that spending follows anyway, no matter who gets elected, has driven a selloff in the bond market in anticipation of more government borrowing.
The dollar has been sold through the week because the prospect of stimulus has supported investors' mood and their appetite for riskier currencies instead, while underlying caution has also given the safe-haven Japanese yen a boost.
"If we do get through and Biden wins and he pushes on with stimulus, then we're back in to a negative U.S. dollar, risk-on, positive for Aussie and kiwi kind of story," said Westpac currency analyst Imre Speizer.
"But for now there's still a bit of a political risk overhang," he said.
The risk-sensitive Australian dollar
The New Zealand dollar
The Japanese yen
The euro (EUR=) has gained 0.8% this week, though pulled back overnight as COVID-19 cases surge in Europe.
British, European and U.S. Purchasing Managers' Index figures are due later on Friday.
Sterling
In offshore trade the Chinese yuan
Analysts said the debate may not move markets immediately, but that political uncertainty over the election meant for a risky environment.
"There may be verbal fireworks but we expect no material impact on the dollar," said Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Kim Mundy.
"We continue to see a high risk that the election outcome is delayed or contested," she said, adding to near-term downside risks for the Australian dollar.