Investing.com - The dollar extended losses against the yen on Tuesday after the Bank of Japan held back from implementing measures to ease market volatility following its latest policy setting meeting.
During European late morning trade, the dollar was sharply lower against the yen, with USD/JPY dropping 1.92% to 96.85.
The yen strengthened against the dollar and the euro following sharp falls in Japanese equities overnight after the BoJ disappointed market expectations for measures to ease volatility in the government bond market.
The BoJ left monetary policy unchanged and said the economy was picking up, one day after official data showed that Japan’s economy expanded by an annualized 4.1% in the first quarter, up from a preliminary reading of 3.5%.
Meanwhile, investors remained focused on whether the Federal Reserve will begin to unwind its easing policies later this year.
Speculation that the U.S. central bank will begin to taper its asset purchase program continued following Friday’s upbeat jobs data and after ratings agency Standard & Poor’s revised its long-term outlook on the U.S. credit rating to stable from negative on Monday, citing an improving economic outlook.
The dollar was trading close to three-month lows against the euro, with EUR/USD rising 0.17% to 1.3278.
Elsewhere, the greenback was higher against the pound, with GBP/USD sliding 0.14% to 1.5548.
In the U.K., official data on Tuesday showed that manufacturing production fell by a smaller than forecast 0.2% in April, and industrial production unexpectedly rose 0.1%.
The dollar fell to session lows against the Swiss franc, with USD/CHF down 0.68% to 0.9270.
Earlier Tuesday, Switzerland’s State Secretariat for Economics revised growth forecasts for 2013 to 1.4% from 1.3% previously, but warned that the debt crisis in the euro zone still posed the greatest threat to the economy.
The greenback was stronger against its Canadian, Australian and New Zealand counterparts AUD/USD dropping 1.16% to 0.9352, NZD/USD tumbling 1.30% to 0.7798 and USD/CAD rising 0.37% to 1.0230.
Earlier Tuesday, official data showed that Australian home loan approvals rose by 0.8% in May, well below expectations for a 2% increase.
The Aussie has come under heavy selling pressure in the last month amid concerns that the economic recovery in China is losing momentum and speculation over an early end to the Federal Reserve's easing program.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28% to 81.68.
