The dollar struggled broadly and hit a 7-1/2 month low against the safe-haven Swiss franc, hurt by wrangling over the U.S. budget and a lack of clarity over when the Federal Reserve will scale back stimulus.
The dollar fell against the yen after Japanese Finance Minister Taro Aso said he was not thinking of lowering the effective corporate tax rate now. That surprised investors who had positioned for a weaker yen on expectations of more fiscal stimulus to prop up the economy.
Sterling rose to above $1.61 against the dollar after Bank of England Governor Mark Carney was quoted as saying he saw no need for more bond-buying by the central bank given signs of recovery in the British economy.
All of which pushed the dollar index down 0.40 percent to 80.20, not far from a recent seven-month low of 80.060 struck after the U.S. Federal Reserve decided last week to maintain its bond buying program at $85-billion a month.