LONDON (AFP) - The dollar gained against the euro and yen the eve of the US presidential election, although analysts warned that the US currency could come under renewed pressure following the result.
The single European currency fell to 1.2745 dollars in early European trading from 1.2795 late on Friday in New York.
The dollar rose to 106.47 yen against 105.75 on Friday.
"The presidential election will hold major event risk, especially as polls continue to show that both contenders remain neck and neck," Calyon currency analyst Mitul Kotecha said.
Although the dollar has enjoyed a slight reprieve over the last fews days, owing in part to lower oil prices, overall sentiment towards the US currency "remains dire," Bank of Tokyo-Mitsubishi analyst Derek Halpenny said.
Dresdner Kleinwort Wasserstein analysts noted:
"Foreign exchange reactions to US elections have been rather short-lived in the past and we would look to sell the dollar on any potential election-induced rallies."
US President George W. Bush and Democrat challenger John Kerry entered the final day of a presidential contest with the outcome balanced on a knife edge.
The Kerry camp hopes that Osama bin Laden's new taunts -- in an Al-Qaeda videotape broadcast on Friday -- will remind voters of Bush's failure to snare him, more than three years after the September 11, 2001 attacks.
But polls have indicated that Bush, who has crafted his image as a "war president", is more trusted on national security, and he has also emphasised his leadership since September 11.
"While some argue that Fridays bin Laden tape will only serve to reinforce the Bush campaign by reminding voters of the fears of terrorism ... the al-Qaeda leaders message appears angled on influencing US voter thinking" behind Kerry, Commerzbank Securities analysts said.
The euro was changing hands at 1.2745 dollars from 1.2795 late on Friday in New York, 135.70 yen (135.13), 0.6953 pounds (0.6952) and 1.5308 Swiss francs (1.5267).
The dollar stood at 106.47 yen (105.75) and 1.2011 Swiss francs (1.1950).
The pound was at 1.8332 dollars (1.8380), 195.20 yen (194.35) and 2.2016 Swiss francs (2.1959).
On the London Bullion Market, the price of an ounce of gold stood at 428.25 dollars against 425.55 late on Friday.
11/01/2004 - 12:29 GMT - AFP