The weakness of the dollar "will continue a bit" as the global economy recovers and the Federal Reserve not only keeps US interest rates low but does not "even think about raising them", said James Ragan, director of wealth management research at DA Davidson. "In the short run, the weakness can benefit US markets," he added.
Meanwhile, the British pound briefly crossed its high of the year to reach $1.3625, and continues to trade above the $1.36 level, as MPs in London approved the post-Brexit trade deal with the EU that was finalised on Christmas Eve.
The strong pound weighed on London's multinational and export-oriented FTSE 100, which closed down 0.7 per cent after gaining 1.6 per cent in the previous session.
Meanwhile, the UK government confirmed on Wednesday morning that the country's medicines regulator had approved the Covid-19 vaccine made by Oxford university and AstraZeneca. The news came shortly after a British woman became the first person to receive the second dose of the vaccine made by BioNTech and Pfizer.
US equities moved higher over hopes vaccinations will propel an economic recovery in 2021. The benchmark S&P 500 index of blue-chip US stocks closed the day up 0.1 per cent in New York, led by advances of more than 1 per cent by the energy and materials sectors. The Nasdaq Composite gained 0.1 per cent.
The yield on 10-year Treasuries, which moves inversely to price, edged lower to 0.92 per cent, after advancing earlier in the session.
MSCI's gauge of Asia-Pacific shares, excluding Japan, rose 1.8 per cent, building on record-breaking gains since November to reach an all-time high. China's CSI 300 index of Shanghai and Shenzhen-listed shares rose more than 1 per cent to its highest point since 2015 as the EU and China prepared to announce an investment treaty. Hong Kong's Hang Seng climbed 2.2 per cent and South Korea's Kospi gained 1.9 per cent.
- Financial Times