Investing.com - The dollar regained ground against the yen on Tuesday after falling to fresh two-month lows overnight, as concerns over turmoil in emerging markets eased, supporting investor confidence.
USD/JPY was up 0.35% to 101.33, recovering from two-month lows of 100.76.
The yen strengthened overnight after Japan’s Nikkei posted its largest one-day decline since June, falling 4.2%, as weak U.S. manufacturing data reinforced negative investor sentiment.
On Monday, data showed that the Institute for Supply Management’s manufacturing index fell to a seven-month low in January, as new orders slumped.
The disappointing data sparked concerns over the outlook for the U.S. recovery, ahead of Friday’s U.S. jobs report for January, after December’s report showed that the economy added far fewer jobs than expected.
Elsewhere, EUR/USD slid 0.13% to 1.3510. In the euro zone, data released on Tuesday showed that the number of people unemployed in Spain rose by 113,097 in January, ending three months of declines, pushing the total out of work to 4,814,435.
The pound edged lower against the dollar, with GBP/USD slipping 0.12% to 1.6284 ahead of U.K. data on construction activity due for release later in the session.
The dollar was also higher against the Swiss franc, with USD/CHF up 0.34% to 0.9042.
The Australian dollar rallied, with AUD/USD up 1.53% to 0.8885 after the Reserve Bank of Australia shifted its policy stance away from easing rates, citing higher than forecast inflation at its latest policy meeting.
The RBA left rates on hold at 2.5%, saying “the most prudent course is likely to be a period of stability in interest rates."
The New Zealand dollar was also higher, tracking gains in Australia’s dollar, with NZD/USD up 0.63% to 0.8135.
The Canadian dollar was little changed against the U.S. dollar, with USD/CAD dipping 0.06% to 1.1110.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.18% to 81.26.