The dollar hit a one-month low against a basket of currencies on Tuesday and a record trough against the Swiss franc as bearish comments from a Chinese official clouded an already weak outlook for the greenback. Investors stepped up dollar selling after a senior official at the Chinese forex regulator warned about the risks of excessive dollar holdings, saying Washington could pursue a policy to weaken the greenback.
The dollar index fell to 73.556, its lowest since May 5, while the greenback fell to 0.8327 Swiss francs on trading platform EBS - a record low. It has lost nearly 11 percent against the Swiss franc this year. The index's fall past support at 73.562, the 76.4 percent retracement of the May 4 low of 72.696 to the May 23 high of 76.366, potentially paves the way for a break below 73.00. A drop beneath 72.696 would send the greenback to levels not seen since 2008.
"Since last week attention had been focusing on uncertainty about the US economy. The dollar was already biased towards the downside and these remarks from the Chinese authorities are just another reason to sell," said Audrey Childe-Freeman, European head of currency strategy at J.P. Morgan Private Bank.
In May the dollar set a low last seen in January 1973, according to the Federal Reserve's price-adjusted broad index. Data also showed speculators increased bets against the dollar in the week to May 31. Against the yen, the dollar crept up to 80.19 yen, after a brief dip below 80.00 on Monday for the first time since May 5, helped by bids from Japanese importers.
The euro rose to its highest in a month, climbing to $1.4683 on EBS, more than 0.7 percent on the day. Traders cited option barriers at $1.47 which could check near-term gains. The euro has gained more than 4 percent from its May 23 low. The immediate target for the common currency is $1.4732, a 78.6 percent retracement of its May 4 to May 23 fall.
Meanwhile, the Australian dollar was down 0.2 percent at $1.0696, moving away from Friday's four-week high of $1.0775 after the Reserve Bank of Australia kept rates on hold and gave no hints of tightening in the immediate future. The New Zealand dollar climbed more than 1 percent against the greenback to $0.8232 as investors sold the Australian dollar against its New Zealand counterpart ahead of a central bank rate decision on Thursday.