TOKYO: The ‍dollar languished near three-week lows against ‍the euro and Swiss franc on Wednesday after White House threats over Greenland triggered a broad selloff in ​U.S. assets, from the currency to Wall Street stocks and Treasury bonds.

The yen was equally on the ropes following a surge in Japanese ⁠government bond yields to record highs as investors fretted about fiscal largesse with Prime Minister Sanae Takaichi looking to expand her mandate in ⁠snap elections ‌next month.

Declines in the dollar accelerated sharply overnight with a 0.53% slide in the dollar index - which measures the currency against six major peers - marking its worst single-day performance in six weeks. On Wednesday, it was ⁠flat at 98.541.

The greenback tumbled more than 1% against Europe's shared currency at one point on Tuesday to reach the lowest since December 30 at $1.1770 per euro. It was last changing hands at $1.1720.

The dollar plunged nearly 1.2% to reach 0.78795 Swiss franc on Tuesday, also the lowest since December 30, before recovering slightly to last trade at 0.78965 franc.

On Monday, U.S. ⁠President Donald Trump's renewed tariff threats against European ​allies over Greenland prompted a repeat of the so-called "Sell America" trade that emerged following U.S. tariff announcements last April.

Investors dumped dollar assets on "fears of prolonged uncertainty, strained ‍alliances, a loss of confidence in U.S. leadership, potential retaliation and an acceleration of de-dollarisation trends," said Tony Sycamore, market analyst at IG in Sydney.

"While there are hopes ​the U.S. administration may soon de-escalate these threats, as it has with prior tariff announcements, it is clear that securing Greenland remains a core national security objective for the current administration," he said.

The S&P 500 and Nasdaq Composite dropped to their lowest points in a month on Tuesday, as investors returned from the U.S. long weekend. Treasury yields, which rise when bond prices fall, vaulted to multi-month peaks.

 

YEN SELLOFF

The dollar was steady against the yen, however, with the Japanese currency suffering its own selloff after Takaichi on Monday called snap elections for February 8 and pledged a wave of measures to loosen fiscal policy.

The longest tenors of Japanese government bonds were hit hardest, with the 40-year yield spiking 27.5 basis points to a record-high 4.215% on Tuesday, although on Wednesday that eased ⁠slightly to 4.145%.

The yen traded at a record low of 200.19 per ‌Swiss franc on Tuesday, and languished at 185.50 per euro on Wednesday, very close to the record low of 185.575 from a week ago.

The Bank of Japan is due to decide monetary policy on Friday, but after hiking interest rates at the previous meeting in ‌January, no change ⁠is expected.

Instead the focus will be on communication over the scope and pace of further tightening, with a hawkish-leaning stance likely with both ⁠the weak yen and political uncertainty raising inflation risks. (Reporting by Kevin Buckland; Editing by Jamie Freed)