China's central bank set its official yuan midpoint at a more than two-year high on Wednesday at 6.4335 per dollar, underpinned by a solid spot yuan performance a day earlier and broad dollar weakness in global markets overnight.

Wednesday's official midpoint was 37 pips, or 0.06 percent, firmer than the previous fix of 6.4372 on Tuesday and was the strongest since Dec. 10, 2015.

China's yuan advanced for the fifth straight trading day on Tuesday to its highest level in more than two years at the official local close.

Meanwhile, the dollar fell to a three-year low against its peers, with an earlier bounce sputtering as the euro edged back after shaking off a potentially negative turn in German politics.

The euro fell on Wednesday after rocketing to a fresh three-year high in early trades above the US$1.23 line, as some investors ramped up bullish bets about the currency though some concerns from policymakers this week damped broader optimism.

Overall dollar weakness and growing optimism about the outlook of the European economy in 2018 has lent fresh legs to the euro's rally, after it gained more than 10% last year.
But the speed of the rise in the opening days of 2018 — up more than 3% in the last two weeks.

The single currency rose to a session high of US$1.2323 against the dollar in Asian trading before falling 0.2% to stand at US$1.2238.

Elsewhere, Canada's central bank is widely expected to raise interest rates by 25 basis points and take the benchmark borrowing cost to 1.25%. Analyst expect the BoC to raise rates as many as three times in 2018.

The Australian dollar rose 0.1% to US$0.7970 and the New Zealand dollar dipped 0.1% to US$0.7260.