U.S. economic reports on Wednesday were mixed. A private sector employment report showed the U.S. economy added more than 200,000 jobs last month but that was offset by weaker-than-expected U.S. manufacturing data.
The Institute for Supply Management said its index of national factory activity dropped to 56.6 last month, its lowest since June, from 59.0 in August. Economists had forecast it would slide to 58.5. A gauge of new orders fell to 60.0 from 66.7.
In late New York trading, the dollar was down 0.3 percent at 109.23 yen, having risen past 110 yen during Asian trade.
The dollar index was flat at 85.949. The index has risen 7.4 percent so far this year, and is on track for its biggest yearly gain in nine years.
The greenback's weakness coincided with the fall in U.S. Treasury yields. Both U.S. 10-year note and 30-year bond yields fell to one-month lows.
The euro, meanwhile, was down 0.2 percent at $1.2611, holding near two-year lows hit on Tuesday. The euro zone's common currency was hit by fresh evidence of a slowdown in inflation in the area.
Data showed euro zone annual inflation cooled to 0.3 percent in September from 0.4 percent, intensifying the case for the ECB to offer more stimulus, including quantitative easing.
That stoked the view that monetary policies in Europe and the United States are diverging. While the Fed is expected to tighten at some point, there is a growing view that the ECB will need to implement a full-blown policy of government bond-buying to fend off the threat of deflation.
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