Investing.com - The dollar slid lower against against the other major currencies on Tuesday, as data pointing to a deepening economic slowdown in China spurred risk aversion, sending Asian equities lower.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.44% at 95.53, still holding above the eight-month trough of 92.52 hit last Monday.
EUR/USD gained 0.48% to trade at 1.2267.
The single currency found support after Eurostat said that the euro zone’s unemployment rate declined to10.9% in July from 11.1% in June. This is the lowest rate recorded in the euro area since February 2012.
Analysts had expected the jobless rate to hold steady in July.
The dollar was sharply lower against the yen, with USD/JPY down 0.98% to 120.03.
Data on Tuesday showed that manufacturing activity in China contracted at its fastest rate in three years in August, while service sector activity also slowed.
China's official manufacturing purchasing managers' index fell to 49.7 in August from 50.0 in July. It was the lowest reading since August 2012, and fell below the 50-point level separating growth from contraction.
The weak data fueled fears over a worsening slowdown in the world’s second-largest economy.
Investors were looking ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
The dollar was lower against the pound and the Swiss franc, with GBP/USD adding 0.09% at 1.5357 and with USD/CHF declining 0.41% to 0.9631.
Sterling fell to a three-month low of 1.5310 earlier, after data showed that the Markit U.K. manufacturing PMI fell to 51.5 in August from 51.9 in July, compared to expectations for a rise to 52.0.
The Australian dollar was lower, with AUD/USD down 0.45% at 0.7080, while NZD/USD edged up 0.17% to 0.6352.
In a widely expected move, the Reserve Bank of Australia held its benchmark interest rate at a record-low 2.00% on Tuesday.
Separately, the Australian Bureau of Statistics reported that building approvals increased by 4.2% in July, beating expectations for a 2.5% rise. Building approvals declined by 5.2% in June, whose figure was revised from a previously estimated drop of 8.2%.
Meanwhile, USD/CAD rose 0.19% to trade at 1.3165.