Dollar hits 3-year low as bounce sputters, euro shakes off political concerns

Wednesday,   17-Jan-2018   09:12 AM (IST)

The dollar fell to a three-year low against its peers on Wednesday, with an earlier bounce sputtering as the euro edged back after shaking off a potentially negative turn in German politics.The dollar index against a basket of six major currencies was 0.27 percent lower at 90.158 after hitting 90.113, its lowest since December 2014. The dollar index momentarily recovered to 90.826 on Tuesday after slipping steadily this month on expectations major central banks would eventually normalize monetary policy.But its rebound dissipated as underlying fundamental expectations that had weakened the greenback so far this year remained intact.The euro was 0.3 percent higher at $1.2296, shaking off weakness seen overnight and going as high as $1.2323, its strongest since December 2014.The common currency had slid to $1.2195 on Tuesday after news which suggested the ECB might not tweak its policy message very soon curtailed the currency's rally.The euro was also weighed on Tuesday as members of the center-left Social Democrats (SPD) in one of Germany's regions voted against talks with Angela Merkel's conservative Christian Democrats (CDU), stoking worries over whether the German chancellor could form a "grand coalition".The dollar was 0.05 percent lower at 110.415 yen. It had managed to rise 110.985 on Tuesday but was headed back towards a four-month low of 110.245 marked on Monday.The Canadian dollar was a shade stronger at C$1.2424 per dollar with immediate focus on the Bank of Canada's monetary policy decision due later in the day.