Dollar dips vs yen as investors turn cautious

"We have risk events piling up", said Blake Gwinn, U.S. rates strategist at NatWest Markets in Stamford, Connecticut.

Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of supporting Islamist militants and Iran.

Asian stocks are mostly higher despite Wall Street's decline for a second day running on Tuesday.

In economic releases, German factory orders figures for April and United Kingdom house price data are slated for release later in the session. With U.K. elections, an European Central Bank policy meeting where policymakers may take a less dovish stance, and former Federal Bureau of Investigation director James Comey's Senate testimony on all set for Thursday, market participants will be wary of taking big positions. The Shanghai Composite was up 0.93 percent while the Shenzhen Composite soared 1.552 percent.

"The market is especially focused on Comey's testimony", said Hikaru Sato, a senior technical analyst at Daiwa Securities.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.62 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.28 percent. German 10-year borrowing costs dropped to six-week lows. Initially buoyed by an overnight bounce in US yields, it had briefly risen to 110.510 early in the session. Gold briefly touched a high of $1,295.97, prices not seen since November.

The greenback has been firmly on the defensive since Friday´s weaker-than-expected USA non-farm payrolls report prompted investors to pare back expectations of future interest rate increases by the Federal Reserve.

U.S. Treasury yields fell as investors piled into low-risk bonds on worries linked to Britain's general election, the European Central Bank's policy meeting and former FBI Director James Comey's testimony before a Senate panel, all scheduled for Thursday.

The Japanese yen hovered near its highest level in a month and gold held near a seven-month high, while oil prices dipped in Asian deals after the U.S. Energy Information Administration raised oil production estimates.

Earlier opinion polls suggested the opposition Labour Party were virtually neck-and-neck with the ruling Conservatives, but a poll released on Tuesday put Prime Minister Theresa May on course to increase her parliamentary majority.

The Mexican peso posted a second day of gains after US and Mexican governments reached a new preliminary agreement to shift their sugar trade mix.

  • Zachary Reyes