FOREX-Dollar recovers; loonie rises ahead of election results

(Recasts, new throughout; adds analyst quote)
By Kate Duguid
NEW YORK, Oct 21 (Reuters) - The U.S. dollar recovered
earlier losses on Monday afternoon as Brexit negotiations were
once again thrown into disarray, and the Canadian dollar
strengthened in the hours before results of the election for
prime minister, which is expected to be close.
Earlier on Monday, the U.S. dollar was crawling toward its
worst month since January 2018 as the pound and euro were pushed
higher by intermittent waves of Brexit optimism.
But the dollar turned around in North American trade after
House of Commons speaker John Bercow refused to allow a vote on
Prime Minister Boris Johnson's Brexit deal, adding to the
obstacles to its ratification in time for an Oct. 31
deadline. Against the dollar, sterling GBP= was last down 0.02% to
$1.297 having earlier broken above $1.30 for the first time in
5-1/2 months. The euro was 0.21% lower against the dollar
EUR= , having also been lifted by Brexit optimism this month by
2.26%.
"Brexit has been doing a lot of the hard work in terms of
moving things around," said Daniel Katzive, head of foreign
exchange strategy for North America at BNP Paribas in New York.
The dollar .DXY was last up 0.05%, but remains down 2.05%
this month. It hovered at $1.115 per euro but managed to claw up
to 108.58 against the safe-haven Japanese yen JPY= . The yen
has been weak too, having hit a 2-1/2-month low last week.
The Canadian dollar CAD= was last 0.31% stronger against
the U.S. dollar as Canadians voted on Monday to determine
whether Prime Minister Justin Trudeau, who swept into office
four years ago as a charismatic figure promising "sunny ways,"
will remain in power after two major scandals. His Liberals and
the main opposition Conservatives led by Andrew Scheer are in a
neck-and-neck race, according to opinion polls. "In Canada, traders are awaiting news on election results
this evening and effectively keeping the powder dry given that
the race is so close at this moment," said Karl Schamotta, chief
market strategist at Cambridge Global Payments.
"The consensus is that if we were looking at a Liberal
government or a minority Liberal government, with the likelihood
of an alliance with the NDP, that would pull the Canadian dollar
back slightly, though we're not looking at a massive move -
something like 50 to 100 basis points," he said, referring to
the smaller left-leaning New Democratic Party.
"Alternatively, a Tory victory would push the Canadian
dollar up slightly, again by 50 to 100 basis points," he said,
referring to the Conservatives.