Australia's dollar extended losses after the Reserve Bank left its policy rate unchanged at a 12-year high as widely expected and said data suggest inflation is moderating. 

AUD/USD fell as much as 0.7% to 0.6572. The RBA held its cash rate at 4.35% as expected. "Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks," RBA Governor Michele Bullock said in a post-meeting statement.

Bids for Australia's dollar from local exporters are layered above a Nov. 30 low and ahead of leveraged sell-stops, according to an Asia-based FX trader.

The Bloomberg Dollar Spot Index rose 0.1% after gaining 0.5% Monday; 10-year US Treasury yields were steady at 4.25% after rising six basis points Monday.

"Markets may have gotten ahead in pricing in a rather aggressive Fed cut trajectory and as such, the USD could potentially be setting itself up for further corrective rebound this week should US data surprise to the upside," said Christopher Wong, FX strategist at Oversea-Chinese Banking Corp. in Singapore.

USD/JPY was steady at 147.19

Inflation in Tokyo decelerated to the slowest pace in over a year, a development that largely aligns with the Bank of Japan's view that price pressures are easing.

Source : Bloomberg