The yen slipped to a fresh three-week low on Tuesday as traders pondered the Bank of Japan's steps last week to tweak its yield curve control policy, while the Australian dollar was soft ahead of the Reserve Bank of Australia's policy decision.

The yen has been on a wild ride since Friday, when the BOJ took another step toward a slow shift away from decades of massive monetary stimulus, saying it would offer to buy 10-year Japanese government bonds at 1.0% in fixed-rate operations, instead of the previous rate of 0.5%. Investor attention during Asian hours will be on the policy decision from the Reserve Bank of Australia.

Markets generally expect policymakers to hold rates steady but a slim majority of economists favor a hike, arguing that inflation is likely to remain sticky for quite some time. The Australian dollar eased 0.06% to $0.672, having risen 0.8% in July.

The Asian currency touched a low of 142.80 per dollar. It was last at 142.66 per dollar, down 0.26%. Japan's benchmark 10-year government bond yield surged on Monday to a nine-year high, leading the central bank to conduct additional purchase operations to cap its rise.

Meanwhile, Federal Reserve survey data released on Monday showed U.S. banks reported tighter credit standards and weaker loan demand from both businesses and consumers during the second quarter. Against a basket of currencies, the dollar rose 0.059% at 101.93, flirting with a fresh three-week peak. The index fell 1% in July.

Meanwhile, sterling was last at $1.2827, down 0.08% on the day, having gained 1.1% in July. Bank of England's policy meeting on Thursday is in the spotlight, with markets evenly divided between a 25- and 50-basis-point increase.

The euro was down 0.06% at $1.0986, while the kiwi eased 0.14% to $0.620.

Source : Reuters