The British pound, lifted by signs of progress in Brexit talks on Wednesday, surrendered some of those gains on Thursday as concerns about trade talks with Europe resurfaced and London faced tighter Covid-19 restrictions.
The Australian dollar fell to its lowest level in a week after the head of the central bank hinted at the possibility of cutting interest rates or buying bonds.
The Australian dollar fell almost 1 percent, its lowest level in a week at 0.7096 against the United States dollar.
"I think there's much more room for further loosening in Australia than in Canada".
Money markets price in a November rate cut and bond markets factor in the RBA possibly starting to buy longer-dated debt, with 10-year bond futures up 8.5 ticks at their highest since April.
The AUD/USD pair added to its intraday losses and dropped to over one-week lows, around the 0.7100 mark during the early European session.
It also fell against the New Zealand dollar and the Japanese yen by 0.5% and 0.8% respectively. The global risk sentiment took a hit in the wake of fading hopes of additional United States fiscal stimulus.
The US dollar index traded at 93.78, a one-week high, while riskier assets, such as Scandinavian currencies, were down more than one per cent on the day.
"Investors' appetite remained subdued for another day as concerns over a delay in distributing a coronavirus vaccine and downbeat comments over a new United States fiscal package continue to weigh on market sentiment", said Charalambos Pissouros, senior market analyst at JFD Group.
UK Prime Minister Boris Johnson had set a deadline of October 15 for progress in the talks.