The dollar struggled against a basket of six major currencies on Wednesday due to low US yields and ahead of the Federal Reserve’s policy meeting minutes, although it remained strong against the yen as improved risk appetite put a lid on demand for the safe-haven currency.

The greenback added 0.2 percent to 110.84 against the yen, which took a defensive stance after Tokyo stocks booked fresh two-month highs. The Japanese currency usually acts as a safe-haven in times of risk aversion.

The dollar was already climbing against the yen on Tuesday after Bank of Japan (BOJ) Governor Haruhiko Kuroda did not rule out the possibility of further policy tightening, saying the central bank was prepared to ramp up stimulus if sharp yen increases harm the economy.

The BOJ does not really have a lot of options left even if it wanted to act, but the global trend-starting with the US, Europe, and Australia is moving toward central bank dovishness and the BOJ’s stance is in line with the trend, said Koji Fukaya, president of a Tokyo-based securities dealer services provider.

Fed Meeting Minutes in Focus


The US dollar index gained 0.03 percent to $96.375, but was still slightly down after losing around 0.4 percent overnight.

Senior Currency Strategist Yukio Ishizuki stated that the dollar is weighed with Treasury yields on a downturn and attempts by participants to price in potentially dovish FOMC (Federal Open Market Committee) meeting minutes are also keeping the dollar on the defensive.

The 10-year US Treasury note dropped to an 11-day low the previous day and before the Fed meeting minutes expected later on Wednesday. Minutes from the central bank’s January 30 meeting will be closely watched following a dovish tone at that assessment.

The Fed kept rates unchanged during last month’s meeting, and said it will be patient about increasing rates in the future.

The greenback has been capped against most of its peers, along with the yen.

The dollar index advanced to a two-month high last week although demand for the US currency has recently faded on hopes that the latest round of discussions between the world’s two largest economies would help end their trade dispute.

The US is reportedly seeking to secure a pledge from China that it will not cut the official value of its yuan as a part of a trade agreement.

The news sent the Chinese currency higher by 0.5 percent to 6.7248, its highest since February 1. The yuan last stood at 6.7246 on Wednesday.    

Elsewhere, the euro rose 0.04 percent to 1.1344 against the greenback, lingering below a two-week high of 1.1358 reached on Tuesday.

The British pound extended its overnight rally and surged to a two-week high of 1.3077 on Wednesday, before easing to trade down 0.2 percent to 1.3028.

Sterling had gained more than 1 percent in the previous day on growing optimism that UK Prime Minister Theresa May will be able to make progress in requesting changes to her Brexit deal with the European Union (EU).

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