By James Glynn and Chelsey Dulaney

The U.S. dollar surged Monday as investors grew more confident that Democratic nominee Hillary Clinton will win the U.S. presidency on the eve of the election.

The Wall Street Journal Dollar Index, which measures the U.S. currency against 16 others, rose 0.6% to 88.03. The Mexican peso, seen as the most vulnerable currency to the U.S. election outcome, rose over 2% against the dollar.

Investors sold haven currencies, which often benefit during times ofmarket distress. The Japanese yen was down 1.3%, while the Swiss franc fell 0.8% against the dollar.

On Sunday, Federal Bureau of Investigation Director James Comey said no new evidence was found to warrant charges against Mrs. Clinton in the investigation stemming from her use of a private email server while in government. Fears that Mrs.Clinton could again face charges in that case, which the FBI closed in July, roiled the dollar and other risk-sensitive currencies last week.

"With the email issue now put to bed at least for now, it is clearly favorable for Clinton's chances at the election," said Ray Attrill, global head of currency strategy at National Australia Bank.

The FBI statements have emerged as polls in the U.S. show the battle for the presidency is narrowing. The investigation was viewed as a liability for the Clinton campaign, which had lost momentum in recent weeks to Republican candidate Donald Trump.

Thelatest Wall Street Journal/NBC News poll found Mrs. Clinton holds a 4-point lead over Mr. Trump, less than half the 11-point edge she had in a mid-October survey before the FBI announced it had found a batch of emails that could be relevant to its investigation of Mrs. Clinton's emails.

A victory for Mrs. Clinton is expected to be less disruptive for markets and therefore more supportive of a U.S. interest-rate increase in December.

"The policy uncertainty associated with a Trump win was seen as damaging to investor sentiment and potentially delaying an expected Fed interest-rate hike in December," said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange, in a note to clients. If Mrs. Clinton wins, Mr. Esiner expects investors to quickly shift their focus back to U.S. interest rates.

Fed-funds futures, which investors use to bet on central-bank policy, show a 76% probability of a U.S. interest-rate increase next month, according to CME Group data. That is up from 67% on Friday. Higher rates typically boost the dollar by making the currency more attractive to yield-seeking investors.

Meanwhile, data Friday showed the U.S. job market strengthening, bolstering the Fed's case for raising rates. U.S. nonfarm payrolls rose slightly less than expected by 161,000 in October, but there was a net 44,000 upward revision to the previous two-months' job gains.

The pound was recently down 1% at $1.239. The pound has been rattled by news of a potential parliamentary fight over Prime Minister Theresa May's plan to leave the European Union, with leaders of the U.K.'s main political parties drawing new Brexit battle lines Sunday.

Hiroyuki Kachi contributed to this article.

Write to James Glynn at james.glynn@wsj.com and Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

November 07, 2016 10:38 ET (15:38 GMT)

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