The U.S. dollar was on the defensive broadly on Wednesday while the EUR and higher-yielding currencies extended impressive gains as investor risk appetite showed little sign of waning ahead of the year end. The Dollar weakened 0.6% to $1.5088 per EUR from $1.5005 yesterday.
The greenback declined for a 2nd day against the EUR as U.S. stock gains followed advances in Europe. The Dollar also declined against the Australian and New Zealand currencies as investors shunned the low-yielding currency in favor of higher-yielding assets for a 2nd straight session. Still, the greenback advanced versus the Japanese yen after the Bank of Japan announced more loans for banks to fight off deflationary pressures. The USD stood at 86.61 yen, having retreated from a high of 87.53, with traders expecting it to hold below the 87 yen mark.
The U.S. dollar also remained lower after the Institute for Supply Management said its manufacturing index fell to 53.6 in November from 55.7 the previous month, dropping far more than economists predicted. The U.S dollar may extend its decline against most major currencies after U.S. pending home resales unexpectedly rose and Dubai World said its debt talks are constructive adding to demand for higher-yielding assets.