LONDON —The dollar edged lower but held within sight of a three-week high on Wednesday as firmer stock markets and commodity currencies such as the Australian dollar prompted investors to trim their long dollar positions.

Though the Bank of Japan struck a cautious note on the outlook for global growth, investors scooped up bargains in risky assets after a rocky start to the year.

“There are a variety of factors, including some small progress in ending the US shutdown as well as possible efforts to prevent a no-deal Brexit for the UK that is boosting risk appetite and pushing the dollar lower,” Brown Brothers Harriman strategists said in a note.

Against a basket of its rivals, the dollar drifted 0.1 percent lower at 96.25. It hit a near three-week high of 96.484 in the previous session.

Despite the slight improvement in risk appetite, investors were wary about rushing into the dollar given the US government shutdown and potential impact on growth.

“The ECB will likely join its global peers in striking a cautious view on growth and that should keep the dollar supported, especially with bearish expectations on the greenback such a consensus trade,” said Lee Hardman, a currency analyst at MUFG in London.

As expected, the Bank of Japan kept monetary policy unchanged. But it lowered its inflation forecast, as a larger-than-expected drop in December exports underlined the need for support for the trade-reliant economy.

On Monday, the International Monetary Fund cut its 2019 and 2020 global growth forecasts, citing a bigger-than-expected slowdown in China and the euro zone. Failure to resolve trade tensions could further destabilize the global economy, the IMF said.

The euro was broadly steady at $1.1367. Sterling rose 0.6 percent to $1.3036 after gaining 0.5 percent in the previous session. — Reuters