The dollar fell on Wednesday as risk appetite receded after big moves earlier in the week and following the announcement from the Bank of Canada that it would hold interest rates steady, a decision that may provide clues about future central bank action. The dollar fell against the low-yielding euro and traditionally safe-haven Swiss franc and Japanese yen, which recorded its biggest two-day loss against the dollar in almost two years on Monday and Tuesday, as risky assets took a breather, analysts said.
"That has allowed the yen, which has been sold heavily over the past few days, to stabilise," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Since the start of the week, the yen had tumbled 4 percent against the dollar - its worst performance since November 2014 - after Japanese Prime Minister Shinzo Abe's ruling coalition won a clear victory in upper house elections, fuelling expectations of more fiscal stimulus measures.
The dollar fell 0.3 percent against the yen on Wednesday to 104.39 yen. It hit a global session low overnight of 103.95 yen shortly after Chief Cabinet Secretary Yoshihide Suga said Japan was not considering "helicopter money," a policy in which governments give money directly to citizens to stimulate the economy. Against the Swiss franc, the dollar fell 0.5 percent to 0.9840 franc. The euro rose 0.5 percent against the dollar to $1.1111.
The US dollar fell by as much as 0.7 percent against its Canadian counterpart, touching a session low of C$1.2940 after the decision. It was last down 0.4 percent at C$1.2993. Sterling fell 0.25 percent in choppy trade against the dollar to $1.3210, after rising nearly 2 percent on Tuesday. The dollar index, which measures the dollar against a basket of major currencies, was down 0.3 percent to 96.149.