The dollar slumped against the euro and the yen Tuesday after a weak reading on Chinese manufacturing activity reignited investors’ fears about a sharp slowdown in the world’s second-largest economy.These worries triggered a resumption of the selloff in global stocks from last week and weighed on the dollar as well as investors reassessed the timing of the first Federal Reserve interest-rate hike.
The dollar shed 1% of its value to trade at USDJPY, +0.74% ¥120.04.
The ICE Dollar index DXY, +0.15% a measure of the dollar against a basket of major currencies, dropped 0.4% to 95.4300.
“Investors are still keeping their eyes on the stock market,” said Kyosuke Suzuki, the head of the foreign-exchange and money-market sales department at Société Générale in Tokyo.
In other currencies, the resource-related, risk-sensitive Australian dollar AUDUSD, +0.0997% gained traction before stabilizing after the country’s central bank left its interest rates unchanged, as expected.
The Australian dollar fell 1.36% to 70.22 cents. The Reserve Bank of Australia kept the cash-rate target at 2%, where it has been since May.
The euro EURUSD, -0.2740% was up 0.7% to $1.1300 in recent trade.
The pound GBPUSD, +0.0653% shaved off an earlier advance and dropped 0.4% against the dollar to $1.5304 after U.K. August manufacturing PMI missed analyst forecasts.
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