By Nick Olivari NEW YORK (Reuters) - The dollar endured its biggest one-day drop against a basket of currencies in 13 years on Tuesday with investors betting global interest rate cuts, which would typically boost the U.S. currency, will stimulate growth and alleviate the global financial crisis. Trade was subdued as the U.S. went to the polls. A victory by Democratic presidential candidate Barack Obama is seen as dollar positive, given he could have an easier time passing his agenda through the Democrat-controlled Congress, but analysts said that has been largely priced in. The Reserve Bank of Australia earlier cut rates by a more-than-expected 75 basis points and the European Central Bank and Bank of England meet on Thursday. Though rate cuts typically erode support for a currency, given the global financial crisis, moves to stimulate economies are being seen as currency positive. "Clearly there is interest out there to buy the dollar, but there is a little bit of taking money off the table in very short-term long dollar positions," said John McCarthy, director of foreign exchange trading at ING Capital Markets. "Today is a weird day, the market is a bit nervous." The U.S. factory orders report for September showed a worse-than-expected decline, but had little impact on foreign exchange trading. Midway through the New York session, the dollar index, which measures the U.S. unit's value against a basket of currencies, traded down 2.4 percent at 84.678 .DXY, its largest one-day percentage drop since September 1995 at current prices. The euro was up 2.6 percent against the dollar at $1.2979, on track for its biggest one-day gain since it was launched in 1999 at current prices. The dollar was up 1.2 percent at 100.29 Japanese yen while the euro was up 3.8 percent at 130.21 yen. The Australian dollar bounced back from an early fall after the Reserve Bank of Australia cut rates by 75 basis points to 5.25 percent, more than the expected 50 basis points. It last traded up 3.1 percent at U.S.$0.6994. Analysts said the euro was benefiting from the Aussie's comeback, with the prospect of further large interest rate cuts from the European Central Bank and Bank of England on Thursday seen as stimulative to their respective economies. "The current grim economic conditions could justify a cut of any magnitude," Calyon analysts wrote in a research note on prospects for UK monetary easing. ELECTION Though an Obama victory was seen as marginally more dollar positive, even a surprise win by Republican John McCain could be supportive for the dollar, some analysts said. "In the broader picture, the fact that (President George W.) Bush, who has taken a benign neglect stance to the dollar, is leaving will be taken as a dollar positive," said Derek Halpenny, European head of global currency research for Bank of Tokyo-Mitsubishi-UFJ in London. Obama was the winner in Dixville Notch, New Hampshire, the tiny town that traditionally opens presidential voting after midnight on Election Day. He gained 15 votes to McCain's six, becoming the first Democrat to win the town since Hubert Humphrey topped Richard Nixon there in 1968. Trends in the race could become clearer soon after the first polls begin to close at 6 p.m. EST in Indiana and Kentucky on Tuesday. Voting in the other 48 U.S. states ends at varied times over the next six hours. Obama expanded his national lead to 11 points over McCain in a Reuters/C-SPAN/Zogby tracing poll, up from 7 points on Sunday. The telephone poll has a margin of error of 2.9 percentage points. Democrats are also expected to expand their majorities in both chambers of Congress. Combined with an Obama victory, that would make it easier for his administration to push through activist policies to boost markets. But there was some risk of the Democrats holding too much power, some analysts said. "A landside Obama victory may raise the fear that Obama may shift more to the left, prompting a dollar-negative reaction in the short-term," BTM-UFJ's Halpenny said. (Additional reporting by Tamawa Kadoya) (Reporting by Nick Olivari; editing by Gary Crosse)

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