Investing.com - The dollar held modest gains the yen on Tuesday after falling to fresh two-month lows overnight amid fears over signs of a slowdown in the U.S. recovery and concerns over a crisis in emerging markets.
USD/JPY was up 0.41% to 101.36, recovering from two-month lows of 100.76.
Investors remained wary after weak U.S. factory data on Monday reinforced negative investor sentiment in the wake of a broad based selloff in emerging markets.
A report by the Institute of Supply Management on Monday showed that its manufacturing index fell to a seven-month low in January, as new orders slumped.
The data sparked concerns over the outlook for the economic 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, the pound was fractionally higher against the dollar, with GBP/USD inching up 0.06% to 1.6314. The pair rose to session highs of 1.6344 earlier.
Sterling was boosted after date released on Tuesday showed that construction output in the U.K. rose at the fastest rate since August 2007 in January, indicating that the economic recovery is continuing.
Markit said the U.K. construction purchasing managers’ index came in at 64.6 in January, up from 62.1 in December, compared to expectations for a fall to 61.5.
EUR/USD dipped 0.07% to 1.3517. The euro remained under pressure after data last week showing that the annual rate of euro zone inflation slowed in January reawakened concerns that the European Central Bank may tighten policy at its upcoming meeting on Thursday, in order to stave off the risk of deflation.
The dollar was higher against the Swiss franc, with USD/CHF up 0.29% to 0.9033.
The Australian dollar rallied, with AUD/USD up 1.70% to 0.8890 after the Reserve Bank of Australia shifted its policy stance away from easing rates on Tuesday, 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 0.90% to 0.8157.
The U.S. dollar was lower against the Canadian dollar, with USD/CAD down 0.36% to 1.1077.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.08% to 81.18.