Investing.com - The dollar was steady against a basket of the other major currencies on Wednesday as concerns over a possible U.S. government shutdown offset optimism over progress on tax reform.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.34 by 03:50 AM ET (08:50 AM GMT) after dipping to an overnight low of 93.13.
Investors remained on edge ahead of a Friday deadline to avoid a U.S. government shutdown with government funding set to expire if lawmakers fail to reach a budget accord.
The dollar remained supported by optimism that U.S. Congress will soon pass tax reform legislation that gives the economy a fiscal boost.
Expectations for higher interest rates also underpinned dollar demand, with investors expecting a rate hike by the Federal Reserve at its upcoming meeting on December 12-13.
The euro was a touch lower against the dollar, with EUR/USD edging down to 1.1817.
The dollar was lower against the safe haven yen, with USD/JPY sliding 0.36% to 112.20.
Demand for the yen was bolstered by heightened geopolitical risks with U.S. President Donald Trump set to recognize Jerusalem as the capital of Israel later on Wednesday.
The pound was lower, with GBP/USD down 0.26% at 1.3408 after UK Prime Minister Theresa May failed to reach an agreement to open talks on post-Brexit trade with the European Union.
The pound was also hit by reports overnight of a failed terrorist plot to kill May.
Elsewhere, the Australian dollar slid lower, with AUD/USD down 0.32% to 0.7584, within striking distance of the five month trough of 0.7531 set on November 21.
Data on Wednesday showed that growth in the Australian economy slowed to 0.6% in the third quarter from 0.9% in the previous quarter and falling short of forecasts of 0.7%. Weak consumer spending also clouded the outlook for growth, according to the report.