Investing.com - The dollar rallied to fresh two-and-a-half year highs against the yen on Tuesday after the governor of the Bank of Japan said that he was stepping down early and elsewhere was lower against the broadly stronger euro.
During European afternoon trade, the dollar hit fresh two-and-a-half-year highs against the yen, with USD/JPY rallying 0.98% to 93.27.
BoJ Governor Masaaki Shirakawa said Tuesday that he was stepping down three weeks before the conclusion of his five year term, along with his two deputy governors.
The move looked likely to speed up a transition towards more aggressive monetary easing, amid continuing pressure from Prime Minister Shinzo Abe’s government on the BoJ to step up measures to combat deflation.
The greenback was lower against the euro, with EUR/USD rising 0.16% to 1.3536.
The euro strengthened broadly after a report showed that the Markit euro zone services purchasing managers’ index improved to a 10-month high of 48.6 in January from a final reading of 47.2 the previous month and above the preliminary reading of 48.3.
The data added to signs of a recovery in the region and offset concerns over political tensions in Spain and Italy which weakened the euro on Monday.
A separate report showed that retail sales in the bloc dropped 0.8% in December, worse than expectations for a 0.5% fall, while November’s figure was revised lower.
The greenback pushed higher against the pound, with GBP/USD sliding 0.14% to 1.5739.
The pound hit session highs earlier after data showed that the U.K. service’s sector expanded at the fastest pace in four months in January, easing concerns over the economy falling back into a recession.
The Markit U.K. services PMI rose to 51.5 last month from a reading of 48.9 in December, outstripping expectations for a reading of 49.8.
The greenback was little changed against the Swiss franc, with USD/CHF edging up 0.01% to 0.9083.
The Swiss franc showed little reaction after official data showed that Switzerland's trade surplus narrowed to CHF1.00 billion from a surplus of CHF2.90 billion the previous month.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD sliding 0.10% to 0.9977, AUD/USD down 0.46% to 1.0389 and NZD/USD down 0.16% to 0.8417.
The Australian dollar was weaker after the Reserve Bank of Australia left interest rates unchanged at 3% on Tuesday and indicated that the inflation outlook left scope to cut rates further in the coming months.
Meanwhile, official data showed that Australia’s trade deficit narrowed to a seasonally adjusted AUD0.43 billion from a deficit of AUD2.79 billion in December. Analysts expected a deficit of AUD0.80 billion.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% to 79.69.
The Institute of Supply Management was to publish a report on U.S. service sector activity later in the trading day.
