Dollar declines as investors lock in profits; Lira logs worst trading day in three weeks

The dollar declined on Wednesday, as investors slashed their long-dollar bets and locked in profits after a four-week rally.

The greenback shrugged off the news of a Russian jet shot down by Turkey near the Syrian border. That contrasted with Asian and European stocks which plunged after the news.

The Stoxx Europe 600 ended the session 1.2% lower to 375.63.

After the publication of the minutes from the Federal Reserve’s October policy meeting, and hawkish remarks from several Fed policy-makers over the past few weeks, many investors have priced in a December interest-rate lift-off, followed by a gradual pace of tightening.

A revised reading on third-quarter U.S. gross domestic product showed the economy grew at a seasonally adjusted annual rate of 2.1% in the three months ended September 30, matching expectations. Preliminary data initially showed U.S. growth was at 1.5% in the third quarter. That is slightly faster than economists had previously believed. But the increase wasn’t sufficiently strong to elevate the dollar.

Meanwhile, the Turkish lira logged its worst trading day in nearly three weeks as investors worried about escalating tensions between Russia and Turkey, as well as in the Middle East in general.

USD/TRY was last seen at 2.8800 after jumping to 2.8814 overnight.

The euro rose to $1.0661, compared with $1.0636 late Monday.

USD/JPY traded at 122.37, compared with 122.92 Monday.

The British pound recovered to $1.5103 after falling as low as $1.5055 overnight.

The British pound weakened against the dollar Tuesday, declining on remarks from Bank of England Chief Economist Andy Haldane, who said he sees more downside risks for the British economy than the central bank’s latest economic outlook reflects.

Moreover, Bank of England Governor Mark Carney, when testifying to MPs, said he did not know when interest rates should start to rise:

"The question in my mind is when is the appropriate time for interest rates to increase, and that is strongly consistent with the strength of the domestic economy," Carney told members of Britain's parliament yesterday.