NEW YORK: The dollar struggled on Wednesday, after gaining for three straight sessions, as risk appetite grew on expectation of an imminent post-Brexit trade deal between the UK and the European Union.
Sterling and the euro took off against the greenback after the Brexit headlines, as did currencies tied to higher risk appetite such as the Australian, Canadian, and New Zealand dollars.
Reuters reported, citing sources, that EU states have started to prepare their procedure to put in place a new trade deal with the United Kingdom from Jan. 1, indicating a deal could be imminent.
US Treasury yields rose, in line with those in Europe and the UK.
In mid-morning trading, the dollar fell 0.3% to 90.16.
The dollar index has weakened more than 6% this year as investors bet the US Federal Reserve will keep its policy ultra-easy. Expectations for further declines by the dollar are helping buoy stock markets and emerging-market currencies.
The euro rose 0.4% to $1.2207. The single currency earlier this month hit its highest in more than two-and-a-half years.
Sterling extended gains versus the dollar, rising above $1.35. The pound which had earlier firmed on the lifting of a French border blockage, last traded up 1.1% at $1.3526. Against the euro, the pound jumped 0.9% at 90.23 pence.
Elsewhere, the Australian dollar gained 0.8% against the dollar to US$0.7578, boosted in part by signs that a small Covid-19 outbreak in Sydney would be contained. The New Zealand dollar also rose 0.7 to US$0.7090.
The dollar dropped 0.2% against the Japanese yen, another safe haven, to 103.44.
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