The euro reversed gains following PMI data releases out of France and Germany while the dollar came under pressure as Treasuries extended Monday's advance.
EUR/USD falls 0.1% to 1.0655, after touching 1.0694 day high; the advance came as the Bloomberg Dollar Spot Index dropped as much as 0.3%, with the US 10-year yield down five basis points to 4.80% day low.
The French and German economies struggled at the beginning of the fourth quarter, with private-sector activity continuing to shrink as demand remains muted and borrowing costs rise .
Spot volumes run at 80% of past-month average, a Europe-based trader says; investors are waiting for the release of US data including the manufacturing PMI due Tuesday, third-quarter GDP Thursday and the Federal Reserve's favored inflation gauge on Friday.
USD/JPY falls as much as 0.3% to 149.32, one-week low.
The Bank of Japan announced unscheduled bond-purchase operations to rein in the recent rise in bond yields.
One-week implied volatility rises as much as 309 basis points to 9.09%, highest since Oct. 4,as the tenor now captures the next BOJ decision.
AUD/USD rallies 0.7% to 0.6379 day high; leveraged funds bought the Aussie before a speech by Reserve Bank Governor Bullock, according to Asia-based FX traders, while others were squaring shorts.
Australia's central bank "will not hesitate" to raise interest rates further if there's a material upgrade to its inflation outlook, Bullock said.
Source : Bloomberg
