The dollar fell against the yen and the yuan weakened, in a sign investors remain wary that China's currency policy has become a new flashpoint in its trade war with the United States.
Risk sentiment took a further hit after the Reserve Bank of New Zealand stunned traders by cutting interest rates more than expected, highlighting the growing concern policymakers have about the global economy.
U.S. President Donald Trump dismissed fears of a protracted trade war with China on Tuesday, but Beijing has sent strong warnings that labeling it a currency manipulator would have severe consequences for the global financial order.
Market sentiment has deteriorated rapidly as a result, which would support the safe-haven yen and hasten yuan declines as there appears to be no quick resolution to the U.S.-Sino conflict.
Elsewhere in currency markets, the New Zealand dollar erased gains to trade 0.7% lower at $0.6471 after the Reserve Bank of New Zealand cut interest rates by 50 basis points to a record low of 1.00%, confounding expectations for a smaller 25 basis point rate cut.
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