The buck has dropped to a 2-week low of $1.2350 against the pound sterling this afternoon, from an early high of $1.2234.
Oil prices rebounded after the International Energy Agency said in its latest monthly report that OPEC crude producing nations were complying with a landmark deal to curb a global supply glut.
European stock markets flatlined on Wednesday before a widely expected Federal Reserve interest rate hike, while Dutch voters head to the polls. The Shanghai Composite Index has risen 2.9% since the USA election, bringing its gains over the past year to more than 13%. It fell as much as 0.7 percent against the euro to 87.85 pence, it was last trading at 87.48 pence per euro.
While higher USA rates would normally spell a stronger dollar, the decision had been well telegraphed and the lack of change in the Fed's view on interest rate increases down the line, sparked a dollar selloff.
The kiwi dollar was trading at 69.90 USA cents as at 5pm in Wellington versus 69.91 cents late yesterday and 69.31 early Monday.
On currency markets the pound edged up after hitting an eight-week low in NY as Britain prepares to trigger its exit from the European Union. The Australian dollar was last trading at $0.7558 in lackluster trade but avoided another test of the recent seven-week low of $0.7491.
Dow Jones closed down by 0.21 percent, S&P 500 ended down by 0.34 percent, Nasdaq finished the day down by 0.33 percent. France's CAC 40 lost 0.2% at 4,989.13.
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The British government issued a statement to the Trump administration protesting the claim, according to the Telegraph . The diplomat and White House official both spoke on condition of anonymity to discuss private conversations.
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US two-year notes, which are considered most vulnerable to Fed policy, were last down slightly in price to yield 1.380 percent, from a yield of 1.372 percent late Monday. Two-year notes edged slightly higher to exhibit a "curve flattener" trade ahead of the Fed statement.
The two-year swap rate rose 2 basis points to 2.30 percent while the 10-year swaps rose 2 basis points to 3.52 percent.
Oil tumbled on Tuesday after OPEC reported a rise in global crude stocks and a surprise output jump from its biggest member, Saudi Arabia, further pressuring prices that have now erased almost all gains since OPEC announced output cuts in November.
BOJ Governor Haruhiko Kuroda said an uptick in inflation toward 1 percent won't immediately trigger an interest rate hike, signalling that Japan will stick to its ultra-easy policy even as other major economies eye withdrawing stimulus.
United States crude rose 1.9 per cent to $48.64 a barrel, after touching a three-month low a day earlier, while benchmark Brent gained 1.8 per cent to $51.82 a barrel.
Overnight, US stocks rose as oil prices jumped and investors took in stride the Fed's 25 bps interest rate hike in light of realized and expected labor market conditions and inflation. Economists had expected housing starts to climb to a rate of 1.260 million from the 1.246 million originally reported for the previous month.
USD/JPY held steady at 114.73, while USD/CHF slipped 0.28% to 1.0074.