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The dollar extended losses against the yen into a third day on Tuesday as markets questioned their expectations the US Federal Reserve would start scaling back its stimulus as soon as next month, putting Japanese shares on the defensive.
The Australian dollar was near three-year lows ahead of an expected cut in official rates to a record low of 2.5%.
The dollar slipped 0.2% to 98.050 yen after the previous session's 0.7% decline, its biggest one-day fall in a week. Against a basket of major currencies, the dollar dipped 0.1%.
The dollar has weakened since Friday after a soft jobs report saw markets temper expectations the Fed could start scaling back its $85 billion-a-month bond-buying programme in September, although a survey showing a pick-up in the US services sector helped limit the losses.
Sterling rose to one-week highs after an industry survey gave hope the UK economy was recovering, before easing to $1.5356 in early Asian trade.
The Australian dollar was down 0.2% at $0.8917 ahead of the Reserve Bank of Australia's rate decision, due at 0430 GMT.. It fell to 3-year lows below 89 US cents on Monday.
"We may see a sharper selloff in the AUD/USD should the RBA keep the door open to further rate cuts in the coming months," said David Song, currency analyst at DailyFX.
ASIA SHARES DIP
Asian shares measured by MSCI Asia-Pacific ex-Japan eased 0.1%. Should the index end the day in the red, it would snap a three-day winning streak.
In Tokyo, the Nikkei share average shed 0.9% on the back of the firmer yen, which lowers income for exporters such as carmakers.
Of the 133 Nikkei companies that have reported quarterly earnings so far, 60% either beat or met market expectations, according to Thomson Reuters StarMine. That compared with 54% in the previous quarter.
In commodity markets, copper was holding below $7,000 a tonne after easing 0.4% on Monday, while gold edged up 0.2% to claw back some of the 0.6% decline in the previous session.
Brent crude prices were little changed at $108.70 a barrel after dipping 0.3% on Monday.
