By Kevin Buckland
TOKYO (Reuters) – The U.S. dollar sagged near an 11-week low against its major peers on Wednesday, under pressure from sliding short-term Treasury yields after a run of weak economic data.
The safe-haven yen strengthened towards its highest level since October with investor sentiment fragile amid the threat of new rounds of tariffs from the administration of U.S. President Donald Trump, whereas the Canadian dollar hovered near a two-week trough with additional levies due to hit next week.
“U.S. data flow on net is now disappointing expectations, calling into question the U.S. exceptionalism narrative that had been USD supportive,” said Tapas Strickland, head of market economics at National Australia Bank.
“Trade policy uncertainty is certainly creeping into sentiment,” hurting commodity-linked currencies and buoying those viewed as havens, Strickland said.
The U.S. dollar index, which measures the currency against six major rivals, slipped 0.1% to 106.17 early in the Asian day, bringing it close to Monday’s low of 106.13, the weakest level since December 10.
A day earlier, the U.S. Conference Board said its consumer confidence index dropped 7 points, its largest fall since August 2021, to 98.3, well short of the 102.5 estimate of economists polled by Reuters.
The result added to other weak data, pushing expectations toward two quarter-point interest rate cuts by the Federal Reserve over the remainder of this year, with the next likely coming in July, according to market pricing.
The two-year U.S. Treasury yield declined to 4.086% on Wednesday, sinking back towards the low of 4.074% from the previous day, a level not seen since November 1.
Treasury Secretary Scott Bessent said on Tuesday the economy is more fragile under the surface than economic metrics suggest, citing interest rate volatility, sticky inflation and job growth focused on the government sector, while also saying that tariffs are an important source of revenue.
Trump said on Monday that tariffs against Canada and Mexico would proceed as scheduled, ostensibly from March 4.
Bessent’s comments and weak data set the U.S. dollar up to begin the global day down 0.1% at 148.865 yen, nearing Tuesday’s low of 148.56 yen, its weakest since October 11.
The U.S. currency edged down from the highest since February 12 at C$1.4318, reached in the prior session, losing 0.1% to C$1.4302.
It was steady at 20.46 Mexican pesos.
The euro added 0.1% to $1.0520, drawing close to Monday’s high of $1.0528, a level last seen on January 27.
Optimism for more spending in Germany has supported the single currency, although election winner Friedrich Merz on Tuesday ruled out a rapid reform to state borrowing limits – known as the “debt brake” – and said it was too soon to say whether the outgoing parliament could wave through a massive military spending boost.
A survey of German consumer sentiment is due later in the day.
Sterling was steady at $1.2669, holding close to Monday’s more than two-month peak of $1.2690.
The Australian dollar eased 0.1% to $0.6339 after data earlier in the day showed annual growth in consumer prices held steady in January.
Bitcoin, the largest cryptocurrency by market capitalisation, drooped 0.5% to $88,246, after slumping 5.6% on Tuesday and touching the lowest level since mid-November at $86,003.11.
Market nerves over U.S. tariffs has reinforced the blow to crypto investor confidence from last week’s $1.5 billion hack of ether from the Bybit exchange.
(Reporting by Kevin Buckland; Editing by Christopher Cushing)
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