Investing.com - The dollar fell to 16-month lows against the other major currencies on Tuesday, as donwbeat Chinese manufacturing data dampened sentiment and as policy decisions by the Bank of Japan and the Federal Reserve still weighed heavily on the greenback.
USD/JPY dropped 0.62% to 18-month lows of 105.77.
Safe-haven demand strengthened after data earlier showed that China’s Caixin manufacturing purchasing managers’ index ticked down to 49.4 in April from 49.7 the previous month, compared to expectations for a rise to 49.9.
The weak data added to concerns over slowdown in the world’s second largest economy.
The yen also remained broadly supported after the BoJ chose on last Thursday to hold its monetary policy, defying market expectations for additional monetary easing.
The decision came a day after the Fed kept interest rates on hold last week and indicated that any future interest rate hikes would be data dependent.
EUR/USD gained 0.53% to a nine-month high of 1.1595.
The dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.18% at 1.4699 and with USD/CHF retreating 0.85% to 0.9463.
Sterling pared earlier gains after research group Markit said its U.K. manufacturing PMI fell to 49.2 last month from a reading of 51.0 in March. That was its lowest level since February 2013.
Analysts had expected the index to advance slightly to 51.2 in April.
The Australian and New Zealand dollars were lower, with AUD/USD down 1.23% at 0.7575 and with NZD/USD sliding 0.37% to 0.0.6995.
The Reserve Bank of Australia surprised markets on Tuesday by lowering its benchmark interest rate to 1.75% from 2.00%.
Commenting on the decision, RBA Governor Glenn Stevens said the rate cut was based on last week's surprisingly weak inflation reading.
Also Tuesday, the Australian Bureau of Statistics said that building approvals rose by 3.7% in March, confounding expectations for a 3.0% decline. Building approvals rose 2.9% in February, whose figure was revised from a previously estimated 3.1% gain.
Elsewhere, USD/CAD was steady at 1.2524, near last Friday’s nine-month lows of 1.2495.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.45% at 92.11, the lowest since January 2015.