Investing.com - The dollar fell to fresh five-week lows against the other major currencies on Tuesday, following news of additional stimulus measures in Japan and as lower expectations for a U.S. rate hike before the end of the year weighed.
USD/JPY dropped 0.64% to trade at 101.76, the lowest since July 11.
The yen strengthened after Japanese Prime Minister Shinzo Abe’s cabinet announced a fresh stimulus package on Tuesday, as part of efforts to boost the economy.
The package includes ¥13.5 trillion in fiscal measures, while actual new, direct spending will total about ¥7.5 trillion, most of it over the next two years.
Meanwhile, the dollar remained under pressure after data on Friday showed a 1.2% U.S. annualized growth rate, well below expectations for 2.6%.
On Monday, the Institute for Supply Management said its index of manufacturing activity dropped to 52.6 last month from June’s 53.2. Analysts had expected the index to tick down to 53.0 in July.
The disappointing data lessened expectations for an early interest rate rise from the Federal Reserve.
EUR/USD gained 0.30% to a five-week high of 1.1196.
The pound also moved higher, with GBP/USD up 0.50% at 1.3243, while USD/CHF slipped 0.25% to 0.9661.
Investors shrugged off a report by research firm Markit and the Chartered Institute of Purchasing & Supply saying their U.K. construction purchasing managers' index fell to 45.9 in July from the previous month’s reading of 46.0.
Economists had expected the index to drop to 43.8 in last month.
The Australian and New Zealand dollars were stronger, with AUD/USD up 0.48% at 0.7574 and with NZD/USD advancing 0.64% to 0.7217.
The Aussie erased earlier losses posted after the Reserve Bank of Australia lowered its benchmark interest rate from 1.75% to a new record-low of 1.50%, in line with expectations.
Also Tuesday, the Australian Bureau of Statistics said building approvals dropped 2.9% in June, compared to expectations for a 0.5% rise.
A separate report showed that Australia’s trade deficit widened to A$3.195 billion in June from revised A$2.418 billion in May. Analysts had expected the trade deficit to narrow to A$2.000 billion in June.
Elsewhere, USD/CAD slid 0.34% to 1.3070.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.40% at 95.37, the lowest since June 24.