Investing.com - The dollar rose to more than three-week highs against the yen on Tuesday after data showed that the U.S. manufacturing sector expanded in March, while the euro remained modestly higher against the greenback.
USD/JPY hit highs of 103.62, the strongest since March 7 and was last up 0.33% to 103.56.
The dollar extended gains after the Institute for Supply Management said its index of manufacturing purchasing managers rose to 53.7 last month from 53.2 in February. Market expectations had been for a reading of 54.0.
The report showed that employment growth slowed, with the employment index falling from 52.3 to 51.1, the lowest level since June 2013.
The yen remained under pressure as expectations that China will implement fresh stimulus measures to shore up slowing growth dampened safe haven demand for the Japanese currency.
EUR/USD was up 0.19% to 1.3797, having recovered from Monday’s lows of 1.3720.
In the euro zone, data on Tuesday showed that the bloc’s manufacturing sector continued to expand last month, but at a slower rate than February.
However, average input costs declined for the second straight month and output prices also dipped, adding to pressure on the European Central Bank to implement fresh policy measures to stave off the threat of deflation in the region.
A separate report showed that the euro zone unemployment rate was 11.9% in February, compared to expectations for 12.0%.
The pound was slightly lower, with GBP/USD slipping 0.12% to 1.6642.
Sterling fell to session lows against the dollar earlier after data showed that the pace of the recovery in the U.K. manufacturing sector slowed unexpectedly in March, but the recovery remained solid and continued to drive strong job creation in the sector.
The Markit U.K. manufacturing purchasing managers’ index fell to an eight-month low of 55.3 last month from a downwardly revised 56.2 in February. Analysts had expected the manufacturing index to tick up to 56.7.
Meanwhile, USD/CHF was down 0.16% to 0.8831.
The Australian dollar was lower, with AUD/USD sliding 0.18% to 0.9246. The pair rose to four-month highs of 0.9302 earlier after the Reserve Bank of Australia left interest rates on hold at 2.5% in a widely anticipated decision.
The Aussie subsequently came off highs after the central bank noted that the currency still remained high by historical standards.
NZD/USD slid 0.13% to 0.8663, after rising to two-and-a-half year peaks of 0.8702 earlier in the session.
Elsewhere, USD/CAD was down 0.18% to 1.1029 as data showing that Canadian producer price inflation jumped higher in February provided a boost to the Canadian dollar.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.11% to 80.17.
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