The dollar slid lower against a basket of the other major currencies on Wednesday as low U.S. government bond yields continued to weigh despite stronger risk appetite in the broader financial markets.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.2% to 93.70 by 03:42 AM ET (08:42 AM GMT).
10-year U.S. Treasury yields have fallen this year to a recent 2.354% from 2.446% at the end of 2016, even as the Federal Reserve has hiked interest rates three times since December.
Investors are concerned that low longer-term bond yields may be signaling a weakening outlook for growth and inflation.
The dollar was lower against the yen, with USD/JPY down 0.36% to 112.04, re-approaching Monday’s lows of 111.87, the weakest since October 16.
Against the euro, the dollar was also lower, with EUR/USD rising 0.22% to 1.1763, pulling away from the one-week low of 1.1712 hit overnight.
The euro was a touch lower against the yen, with EUR/JPY sliding 0.14% to 131.83 after having gone as low as 131.160 on Monday to its weakest since mid-September.
The euro remained under pressure amid ongoing uncertainty over German Chancellor Angela Merkel’s efforts to form a government.
Investors fear that political deadlock in the euro area’s largest economy will hamper prospects for overhauling the European Union and the euro.
Sterling was little changed against the dollar, with GBP/USD at 1.3243 as markets awaited the annual British budget statement later Wednesday as the UK prepares for Brexit.
The euro was higher against the pound, with EUR/GBP rising 0.18% to 0.8880, after falling to a one-and-a-half week low of 0.8841 the previous day.
Trade volumes remained relatively thin ahead of the U.S. Thanksgiving holiday on Thursday, which is also a national holiday in Japan.
Investors were looking ahead to the minutes of the Federal Reserve’s November meeting later in the day for any fresh indication that a December rate hike is on the cards.
