The dollar fell broadly on Tuesday, hitting a six-week low against the yen, as investors pared back bets on the U.S. currency on uncertainty about when the Federal Reserve will start reducing its bond purchases. Expectations that the Bank of Japan, at its monthly monetary policy meeting this week, will refrain from embarking on more stimulus measures also boosted the yen. The dollar fell as low as 97.51 yen, its lowest since June 26, according to Reuters data. It last traded down 0.6 percent at 97.72 yen.
The euro rose 0.4 percent to $1.3307 on news of a surge in factory output in Britain and Germany, which extended a string of recent upbeat data that boosted hopes for an early end to the euro zone's 18-month recession. But most analysts believe the region still significantly lags the kind of recovery under way in the United States.
The Australian dollar rose after the Reserve Bank of Australia cut interest rates as expected and gave no clear indication it would ease policy further, disappointing some who had positioned for it. A squeeze in short positions saw the Australian dollar rise 0.6 percent to $0.8985, pulling away from a three-year low of $0.8848 struck on Monday. It has risen for two days and was on track for its best daily performance in two weeks.