Dollar off recent highs after FBI's move on Clinton causes a stir
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Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration, in Beijing, China, January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo
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By Lisa Twaronite and Hideyuki Sano
TOKYO (Reuters) - The dollar edged up on Monday, staying on track for a monthly gain, but remained shy of recent highs as investors became less sure that Hillary Clinton would win the U.S. presidential election after the FBI's new probe into her private email use.
The dollar index, which tracks the greenback against a basket of six major currencies, added 0.1 percent to 98.418 <.DXY> <=USD>, up 3.1 percent for October and likely to match May's gain, but below last Tuesday's nearly nine-month high of 99.119.
The dollar tumbled late on Friday after the U.S. Federal Bureau of Investigation revealed its probe of newly found emails related to Clinton's use of a private server, rocking the Democratic candidate's campaign just days ahead of the Nov. 8 election.
Markets saw the issue handing an advantage to Republican rival Donald Trump, who has been trailing Clinton in polls but has shown some signs of slight improvement in recent days.
Investors have tended to see Clinton as the candidate of the status quo, while there is greater uncertainty over what a victory Trump might mean for U.S. foreign policy, international trade deals and the domestic economy.
"Clinton's email problems are an ongoing issue, and resolution seems unlikely ahead of the election next week," said Kumiko Ishikawa, senior FX analyst at Gaitame.Com Research Institute in Tokyo.
"So it's difficult for investors have a 'risk-on' mood, but at the same time, unless new factors emerge, it's hard for them to sell the dollar, too," she said.
Before news of the FBI's fresh probe emerged on Friday, the dollar had gained on stronger-than-expected U.S. GDP growth, which reinforced expectations of a Federal Reserve rate hike in December.
The Fed is widely expected to keep its policy on hold at its policy meeting ending on Wednesday. Money markets were still pricing in about a 70 percent chance of a rate hike in December.
"There's no change in the market's perception that the Fed will raise rates in December. And the biggest question for the market is the pace of the Fed's rate hike next year," said Kyosuke Suzuki, director of forex at Societe Generale.
Against the yen, the dollar inched 0.1 percent higher to 104.77 yen
Current markets showed little reaction to data released earlier on Monday showing Japan's industrial output stalled last month. Retail sales also fell more than expected from a year ago, further evidence that private consumption remains a drag on growth.
The Bank of Japan began its two-day policy review on Monday and was also widely expected to stand pat, particularly after broad hints from Governor Haruhiko Kuroda.
In Europe, the euro zone flash GDP estimate and inflation data are due later in the day.
While the data may not significantly change investors' perception on the euro zone economy, stronger readings could fuel talk that the European Central Bank may scale back its bond buying program next year.
The Mexican peso
(Editing by Simon Cameron-Moore)
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