Australia's dollar led gains among major currencies as China's move to boost the yuan lifted market sentiment.

The Aussie climbed after the People's Bank of China set the currency fixing more than 100 pips stronger-than-expected. Australia's currency had risen initially on exporter buying before extending gains as a rally in the yuan led to leveraged short-covering, according to Asia-based FX traders.

The stronger-than-expected fixing shows officials are attempting to stem the rate of yuan depreciation, said Jason Wong, a currency strategist at Bank of New Zealand in Wellington. The fixing is supporting risk appetite and weighing on the dollar.

AUD/USD climbed 0.5% to 0.6709.

USD/CNY fell as much as 0.5% to 7.2062.

The yuan had suffered its biggest decline in nearly five months Monday -- a drop of about 1% -- as sentiment soured toward the country's growth prospects.

USD/JPY dropped 0.1% to 143.44 as it extended its retreat from a seven-month high touched on Friday amid intervention concern.

The Bloomberg Dollar Spot Index declined 0.1% in a second day of declines.

Source : Bloomber