The dollar fell to its lowest in three weeks on Friday as hedge funds sold the U.S. currency on growing concerns about the looming fiscal problems in the United States which could drive the economy into a recession.
The dollar dropped to 79.21 yen on trading platform EBS, its lowest since Oct 19 and down 0.3 percent on the day. Traders cited stop-loss sell orders below 79.20 yen.
The yen is the most sought after currency at times of financial stress and doubts about an economic recovery.
The dollar’s drop mirrored narrowing spreads between the yields on two-year U.S. Treasuries and Japanese government bonds. The currency pair has a robust relationship with that spread.