The dollar edged broadly lower in a quiet market on Wednesday as concerns about a possible US government shutdown offset optimism about the progress on tax reform legislation.

Analysts said it was unlikely for there to be any big moves in the dollar until at least after Friday's closely watched non-farm payrolls report, and perhaps not until next week's US Federal Reserve policy meeting is out of the way.

Bitcoin hits new record high

Bitcoin's moves dwarfed any traditional currency's once again, with the cryptocurrency hitting a new record high of more than $12,500, up almost 7 per cent on the day. It is on track for its strongest quarter since 2013 after almost tripling in price since the start of October.

The dollar index, which tracks the greenback against a basket of six major currencies, inched 0.1 per cent lower to 93.297. It hit a five-day low of 111.99 yen, down half a per cent on the day.

The United States' Republican-controlled House of Representatives had voted on Monday to go to conference with the Senate to begin formal negotiations on a tax reform Bill, with the Senate expected to hold a similar conference vote later this week - a development seen as positive by markets.

But in the meantime, the possibility of a US government shutdown looms, if lawmakers fail to reach a budget accord this week. Government funding is set to expire on Friday.

“As we know, in general they (US Congress) find a solution, even if it's a last-day solution,” said Commerzbank currency strategist Esther Reichelt.

“But ... in general political turmoil is an underlying weight on the dollar and it's one of the reasons the euro is above the $1.18 level at the moment.”

The euro was steady on the day at $1.1820.

Expectations of higher US rates underpinned the dollar, though a flattening US Treasury yield curve kept investors' hopes in check.

Fed rate hike

Fed funds futures prices show investors expect the US central bank to hike rates at next week's meeting, with futures prices showing a zero per cent chance of rates remaining at their current level of 1.00-1.25 per cent.

The Australian dollar slipped 0.4 per cent to $0.7580, within sight of its five-month low of $0.7532 plumbed on November 21, after weak growth data.

The Canadian dollar edged down 0.1 per cent to C$1.2699 against its US counterpart ahead of a Bank of Canada policy meeting later in the day.

“The BoC should leave rates unchanged and the main question is whether it offers any hints with respect to the January meeting,” wrote Credit Agricole analysts in a note to clients.

“If the BoC is seriously considering (another) hike, it could offer a hint by referring to some evidence of building underlying price pressures. Market-implied odds are at 40 per cent for January at the moment, so it would take at least some upgrade to the statement to push them above 50 per cent.”

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