TOKYO, Feb 20 — The US dollar sagged against its peers today in the wake of falling US yields and as investors remained cautious ahead of the Federal Reserve's policy meeting minutes due later in the session.
The US currency has also been weighed down as safe-haven demand for the liquid dollar has ebbed on optimism that a fresh round of talks between China and the United States would help resolve their trade conflict.
The US dollar index versus a basket of six major currencies was a touch lower at 96.495 after shedding about 0.4 per cent overnight.
“The dollar is weighed with Treasury yields on a downturn. Attempts by participants to price in potentially dovish FOMC (Federal Open Market Committee) meeting minutes are also keeping the dollar on the defensive,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
The benchmark 10-year US Treasury yield fell sharply to an 11-day low yesterday ahead of the Fed meeting minutes, which are due later today.
The minutes from the January Fed meeting will be closely watched following a dovish statement from the central bank at their January policy-setting meeting.
The US dollar was steady at 110.61 yen, unable to remain near a high of 110.825 touched the previous day after Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy.
“It's hard for the dollar to retain its gains against the yen as the downward pressure from lower US yields is quite strong,” Ishizuki at Daiwa Securities said.
The euro was unchanged at US$1.1341 after advancing 0.25 per cent yesterday, when it brushed a near two-week peak of US$1.1358.
The pound was effectively flat at US$1.3063 after rallying the previous day to a two-week high of US$1.3073.
Sterling had surged more than 1 per cent yesterday on hopes that British Prime Minister Theresa May will make progress in seeking changes to her Brexit deal with the European Union.
Offshore Chinese yuan extended the previous day's gains to touch 6.74 per US dollar, its strongest since February 1.
The yuan had been lifted yesterday after Bloomberg reported that said the United States is pressing to secure a pledge from China that it will not devalue its yuan as a part of a trade deal. — Reuters
