The dollar was on the defensive against most other majors Tuesday morning as Americans prepared to choose their next president on Election Day. Polling suggests the Democratic nominee Barack Obama (D-IL) has an easier path to victory, but few analysts have dismissed the possibility that Republican John McCain (R-AZ) can pull off the upset. US stock futures turned sharply higher and global stocks were steady, fueling increased risk appetite and giving higher-yielding currencies a boost versus the lower-yielding dollar and yen. While Tuesday's economic data will be largely overshadowed by election results, the release of the Commerce Department's report on factory orders in the month of September may attract some attention. The dollar dropped to a 3-week low of 1.1640 versus its Canadian counterpart, extending its move away from last week's 4-year high just above 1.30. The loonie, usually sensitive to oil, has managed to find its footing over the past week even as the price of oil hovered near the $65 a barrel mark. The dollar gave back its gains from the previous session versus the euro Tuesday morning, slipping to 1.2840 from an overnight high near 1.2550. The buck has leveled off since hitting a 2-year high of 1.2328 early last week. The buck also came under modest pressure versus the sterling, easing to 1.5930 from an early high of 1.5600. Trading with the sterling has been choppy for the past two weeks, with the dollar unable to extend its 7-year high of 1.5257. Amid signs that global equities have set a bottom after a disastrous run of October, increased risk appetite gave the buck a modest lift against the yen. The dollar rose to a 2-week high of 99.79 versus the yen, moving further away from October's 13-year low of 90.88.

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