The dollar softened as traders squared positions ahead of what is expected to be a close US presidential election, while options volatility soared after recent polls dented some market bets on a victory for Republican Donald Trump, Reuters reports.

Democrat Kamala Harris has also experienced improving odds on election gambling sites and had a slight lead on PredictIt overnight, although Polymarket continued to show Trump as favourite.

In recent weeks, financial markets and some betting platforms had leaned strongly in favour of a win for Trump, whose tariff and immigration policies are considered inflationary by analysts, leading to a rise in US Treasury yields and gains for the dollar.