The dollar wallowed near a six-week low against the safe-haven yen on Wednesday, with traders cautious ahead of Britain's general election, a European Central Bank policy decision and testimony by former FBI Director James Comey. The greenback treaded water at 109.490 yen, not far from 109.225, its lowest since April 21 plumbed overnight. The dollar has lost 0.9 percent against the yen this week, also pressured by a sharp drop in US Treasury yields to seven-month lows as investors sought the safety of government debt.
The US currency was seen coming under more pressure as previously bullish equities also began declining. Wall Street shares pulled away from recent record highs and fell overnight as demand for risky assets waned ahead of Thursday's events. "The dollar has felt the tug of lower US yields for a while now, but buoyant stocks had helped neutralise some of that pressure," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
Comey, who will testify on Thursday, was investigating whether Donald Trump's presidential campaign and Russia colluded to sway the 2016 US election when he was fired by Trump in May. Investors are worried his testimony could dampen already flagging momentum for Trump's agenda of rolling back regulations and overhauling the tax code. The dollar index against a basket of major currencies was a shade lower at 96.624 following a slip to 96.515, its lowest since November 9.
The euro was little changed at $1.1267 after climbing about 0.2 percent overnight. The common currency was still shy of the seven-month high of $1.1285 touched on Friday as a wait-and-see mood prevailed ahead of the European Central Bank's policy meeting on Thursday, another of this week's major events that the markets are bracing for.
The pound was 0.1 percent lower at $1.2900 after swerving between $1.2951 and $1.2873 the previous day. Sterling has seen choppy trading on polls suggesting outcomes ranging from a majority for Prime Minister Theresa May's party to a 'hung' parliament in which no party has an overall majority.
The Australian dollar added 0.45 percent to reach a one-month high of $0.7544 after data showed the resource-rich economy grew 0.3 percent in the first quarter, dousing fears that its record expansion may have ended. No such boost was available to the New Zealand dollar, which traded flat at $0.7185. The kiwi was still close to a three-month high of $0.7206 scaled the previous day on the greenback's broad slide.
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