The dollar sank to a three-month low as rising commodity pricesreignited bets that the global reflation trade will take hold in2018, dimming the greenback's appeal relative to currencies offaster-growing economies.

The U.S. currency fell against most major and emerging-marketcounterparts Tuesday as the Bloomberg Commodity Index reached itshighest level in about 11 months. Combined with reports showingstrength in Chinese and European manufacturing, there is probablymore pain ahead for the dollar as investors anticipate moneyflowing into other economies, said Mark McCormick at TorontoDominion Bank.

“The backdrop for the dollar is just not very good,” saidMcCormick, the bank's North American head of foreign-exchangestrategy. “The global reflation trade is progressing along and thebackdrop is that we're rotating into a regime shift and that comeswith a changing backdrop for capital flows.”