Investing.com -- The U.S. Dollar Index fell sharply on Wednesday, as the British Pound and Japanese Yen both rose steadily against the greenback, dragging the U.S. currency to a fresh 1-week low against its main rivals.
The Index, which measures the strength of the dollar versus a basket of six major currencies, fell more than 0.55% to an intraday low of 95.38 before paring some of the losses to move back up to 95.59 at the close of U.S. afternoon trading. The index is on pace for its second straight loss after halting a four-day winning streak on Tuesday. Since hitting four-month highs at 97.62 in late-July, the Dollar Index has tumbled nearly 2%.
The dollar slid more than 0.65% against the Yen on Wednesday moving below 101 for the first time in three sessions after reports showed that Japan's core machinery orders surged by 8.3% in July. Analysts expected to see a gain of 3.4% on the month. It marked the first increase in the reading in three months. The dollar has fallen nearly 4% against the Yen since the Bank of Japan implemented modest easing measures, including the launch of a ¥1 trillion ETF program on July 29.
Meanwhile, GBP/USD rose modestly to an intraday high of 1.3095, before falling back slightly to 1.3011 (up 0.07%). Earlier on Wednesday, the Bank of England said it would make up a £52 million shortfall in bond purchases, one day after investors refused offers to sell long-dated gilts to the central bank in a reverse auction. In Tuesday's session, GBP/USD fell to a near 1-month at 1.2992, as the BOE resumed its purchasing program of long-term sovereign bonds.
USD/BRL fell more than 0.55% to an intra-session low of 3.1139, after the Brazilian Senate voted to hold an impeachment trial against suspended president Dilma Rousseff. Following a lengthy debate on Wednesday, the Senate voted 59-21 to indict Rousseff. In May, Rousseff was suspended by the Senate for allegedly manipulating budgetary deficits in the run up to the 2014 presidential election.
Elsewhere, the U.S. Department of Labor reported that job openings rose by 2.0% in June to 5.624 million from a relatively soft revised annualized rate of 5.514 million a month earlier. Analysts expected to see slight increases on the month to 5.588 million. At the same time, the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) showed there were 5.1 million hires in June, an increase of 1.7%, offset slightly by 2.9 million quits on the month. The mild increase in monthly job openings was driven by an increase in job postings in the durable goods manufacturing sector.
Over the last several weeks, a host of policymakers on the Federal Open Market Committee (FOMC) have indicated that a September interest rate hike could be on the table if the labor market continues to show improvement and inflation moves closer to its targeted goal of 2%. On Wednesday, placed the probability of a December rate hike at 37.8%, up from around 30% last week.
Any rate hikes by the Fed this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
Yields on the U.S. 10-Year fell four basis points to 1.51%. Over the last 52-weeks, yields on 10-year U.S. Treasuries have plunged by more than 70 basis points. An auction of 10-year U.S. notes on Wednesday reflected solid demand, as investors purchased $23 billion in debt at a yield of 1.503%.