NEW YORK: The dollar fell from a one-week high on Wednesday, as political wrangling over a stimulus package for the US economy halted its recent rebound.

The greenback, however, rose to a three-week peak against the yen, climbing for a fourth straight session. The dollar/yen pair typically moves in tandem with US Treasury yields, with the 10-year advancing to a one-month high.

Stronger-than-expected US CPI numbers, meanwhile, briefly lifted the dollar against a basket of currencies.

In mid-morning trading, the dollar index, which has held above a two-year low hit last Thursday, was down 0.3% against a basket of currencies at 93.390, after shedding gains made in Asian trading. Against the yen, the dollar rose 0.3% to 106.77 yen.

Improved US debt yields have pressured the yen by luring investment from zero-yielding Japan. The euro was up 0.5% at $1.1793. Sterling was broadly flat, despite data showing the British economy had entered a deep recession, as signs of a recovery in June provided some support for the currency.

The New Zealand dollar was flat at US$0.6576, after the country's central bank held rates but surprised markets by extending its bond-buying programme and putting slightly more emphasis on the possibility of negative rates.