U.S. Dollar Edges Higher

The dollar was slightly firmer against a basket of major currencies early on Tuesday, advancing against the euro and sterling in thin trade with several key financial centers shut for holidays.  The euro last traded at $1.1146 EUR=, continuing to peel away from a two-month peak of $1.1290 set on Friday. It also lost a bit of ground against the yen, slipping to 133.96 EURJPY=R, from Friday’s two-month high of 135.29.

Sterling stayed on the defensive just days before Britons vote in the closest-fought electoral race in recent history.  It bought $1.5116 GBP=D4, not far from a one-week low of $1.5091 set overnight. It has fallen more than 2 percent in the past few sessions.

“Political uncertainty is set to remain high after the election,” analysts at JPMorgan wrote in a note to clients.  “We believe it could possibly take four weeks to form a government rather than the one week it took in 2010, and view GBP as too expensive for the election and re-enter EUR/GBP longs.”