The US dollar fell against a basket of six major currencies on Wednesday, pressured by a number of negative factors including intensified worries over a partial U.S. government shutdown and tension between the White House and the Federal Reserve.
Fears over a U.S and worldwide economic slowdown have sent U.S. 10-year Treasury note falling by about 25 basis points in December, adding to the rising strain on the greenback and further dimming its outlook.
“Moderating U.S. growth and political tensions are negative for the dollar and we expect continued weakness,” said currency strategist Sim Moh Siong.
“I expect the biggest winner of global risk-aversion to be the yen.”
The US dollar has struggled mainly against the yen, suffering losses for eight consecutive sessions as a large risk-off move in financial markets strengthened the safe-haven Japanese currency. It endeavored to stabilize in early Asian trade on Wednesday, recovering 0.1 percent on the yen to 110.43.
Analysts at a Japanese bank said the sharp decline in U.S. 10-year treasury yields has dented the dollar’s performance against its peers. The U.S. 10-year paper is currently yielding 2.73 percent, having dropped from 3 percent earlier this month.
The euro and the British pound tacked on 0.2 percent each, changing hands at $1.1415 and $1.2705, respectively. The Australian dollar gained 0.1 percent to reach $0.7043.
The greenback has struggled to fight off a growing list of bearish factors in recent months, led most mainly due to speculation over the outlook for U.S. interest rates, tumbling bond yields and the fall in oil prices.
A week ago, the Federal Reserve made its fourth rate hike for 2018, and largely stuck to plans to raise interest rates next year in spite of growing economic risks.
That urged U.S. President Donald Trump to intensify his criticism of Fed Chairman Jerome Powell, with the public spat between the White House and the Fed unnerving investors.
Trump blasted the Fed on Monday, describing the central bank as the “only problem” for the U.S. economy.
The partial U.S. government shutdown has also exacerbated investor concerns over global economic growth. The U.S. Senate has failed to end an impasse over Trump’s request for additional funds for a wall on the border with Mexico, and a senior official said the shutdown might go on until January 3.
Meanwhile, commodity currencies such as the Canadian dollar traded at C$1.3609 in Asian trade, near its lowest level in more than a year. The New Zealand dollar was at $0.6729, adding 0.06 percent on the dollar.