Investing.com - The dollar was steady against a basket of other major currencies on Tuesday after the International Monetary Fund cut its forecast for global growth for 2014 and 2015 and warned that the global recovery is weak and uneven.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.09% to 85.97, off Monday’s lows of 85.73.
The IMF is now forecasting global economic growth of 3.3% this year, down from 3.4% in July and expects growth of 3.8% in 2015, compared to an earlier prediction of 4.0%.
The fund said Europe was experiencing a "multispeed recovery" and revised down its growth forecasts for Germany, France and Italy saying progress was still "slow and tentative" in many countries.
Japan received the largest downgrade of any country, with growth for this year now expected to be 0.9%, in part due to the effects of a sales tax increase in April.
USD/JPY touched lows of 108.12 and was last down 0.45% to 108.30.
The yen found support earlier Tuesday after Japanese Prime Minister Shinzo Abe voiced concerns over the impact of a weaker yen on the economy.
The Bank of Japan left monetary policy unchanged at the conclusion of its two day policy meeting earlier, but acknowledged that declining domestic demand as a result of the sales tax hike is leading to economic weakness.
EUR/USD hit session lows of 1.2584 and was last down 0.21% to 1.2627.
The single currency came under pressure earlier Tuesday after data showed that industrial output in Germany dropped by 4.0% in August. It was the largest decline since early 2009 and was much worse than forecasts for a fall of 1.5%.
The weak data fuelled fears that the euro zone's largest economy could be sliding into a recession.
The pound edged higher against the dollar, with GBP/USD inching up 0.09% to 1.6096.
In the U.K., data showed that industrial output was flat in August, adding to signs that the economic recovery may be moderating.
The IMF left its July forecasts for U.K. growth of 3.2% growth this year and 2.7% next year unchanged on Tuesday.
The dollar pushed higher against the Swiss franc, with USD/CHF adding 0.18% to trade at 0.9599.
Meanwhile, the Australian dollar was up 0.58% to 0.8814. Earlier Tuesday, the Reserve Bank of Australia kept rates on hold at 2.5% and said it expected growth to remain “moderate” over the next several quarters.
Elsewhere, NZD/USD eased up 0.10% to 0.7849, while USD/CAD was up 0.46% to 1.1181.
In Canada, a report earlier showed that the number of building permits issued in August dropped 27.3%, the largest drop on record.