The U.S. dollar fell on Wednesday as investor sentiment improved and government bond yields extended their retreat, while commoditylinked currencies such as the Australian and Canadian dollars held on to recent gains.

Lower U.S. bond yields also sapped some of the dollars appeal among lowyielding currencies, with the yen and Swiss franc recovering from multimonth lows overnight.

A jump in government bond yields in recent weeks has rattled financial markets. Investors scaled up their bets that economic recovery, helped along by a big U.S. fiscal stimulus package, would lift inflation and lead central banks to normalise monetary policy as economies recover from the COVID19 pandemic.

Global stocks dropped from near record highs and prices of commodities wobbled.

But this week has seen some calm return to the market, with yields dropping and stocks rebounding.

An index of the dollar against six of its major peers slipped to 90.975 after dropping back from a nearly onemonth high overnight.

Analysts said they expected Federal Reserve Chair Jerome Powell to reiterate on Thursday recent comments by fellow policymaker that any rises in rates would be gradual and that the U.S. economy was still far from the banks goals.

The Fed is rightly more concerned about the speed of the move rather than the move higher in yields. The comments should help to dampen volatility in the bond market and the U.S. dollars upward momentum in the nearterm, MUFG analysts said in a note….