Dollar slips as commodity currencies steady

The U.S. dollar slipped against other major currencies on Tuesday, with volatility in global markets dulling prospects for U.S. interest rates increases, while Canada's and Australia's battered commodity-related currencies steadied.

Global stocks slid to lows not seen in more than two years as raw materials prices and emerging markets remained under pressure. Commodity prices edged up but held near multi-year lows on concern over an economic slowdown in major consumer China.

Mining and trading giant Glencore, whose shares fell by almost a third on Monday on worries over its debt, saw gains of 17 percent in London that helped the Australian and Canadian dollars.

The Australian dollar was ahead much of Tuesday and was last 0.16 percent higher at $0.6989, recovering from a low of $0.6934, while the U.S. dollar was up 0.22 percent against the Canadian unit at C$1.3428, having risen to a 11-year high earlier in the day.

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The U.S. fluttered around flat and was last off 0.17 percent as dealers treaded carefully ahead of Friday's U.S. jobs report, likely to confirm the relative vigor of America's labor market.

"Investors are caught between expecting the dollar to rally and being fearful of the volatility in financial markets," said Shaun Osborne, chief currencies strategist at Scotiabank in Toronto. "This isn't the kind of environment where people want to take big bets."

Deepening concerns about the global economy, a recent sharp correction in stock markets and mixed messages from Federal Reserve officials led to a drop in front-end U.S. yields , and weighed on the dollar.

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The was 0.27 percent higher against the dollar at 0.9717 franc per dollar. The yen was slightly firmer on the day against the dollar, trading at 119.72 yen.

"The market thinks the latest bout of risk aversion will drive the Fed to postpone a rate hike," said Niels Christensen, FX strategist at Nordea. "That is weighing on the dollar, while the yen and the franc are trading higher."

The euro was up 0.17 percent against the dollar and was last flat against the yen as Spanish consumer prices fell at their fastest rate in seven months in September and regional data out of Germany pointed to inflation stuck around zero.