Investing.com - The dollar turned broadly lower against a basket of other major currencies in thin trade on Tuesday, as markets digested the previous session's U.S. data that sent the greenback broadly higher and no major U.S. economic reports were expected throughout the session.
The dollar had rallied broadly on Monday after data showed that U.S. manufacturing activity continued to expand in February supported expectations for higher interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.20% at 95.33.
The euro trimmed earlier losses, with EUR/USD steady at 1.1186.
Spain’s Employment Ministry reported that the number of unemployed people declined by 13,500 last month, compared to expectations for an increase of 10,500. The number of unemployed people rose by 78,000 in January.
Data also showed that German retail sales jumped 2.9% in January, easily outstripping forecasts for a 0.4% increase.
The euro's gains were limited however, as investors remained cautious ahead of the upcoming European Central Bank meeting on Thursday, when it was expected to announce details of its quantitative easing program.
The dollar was lower against the yen, with USD/JPY down 0.45% to 119.61 and edged up against the Swiss franc, with USD/CHF adding 0.13% to 0.9595.
In other trade, sterling held steady, with GBP/USD at 1.5374.
The pound showed little reaction to a report by market research firm Markit and the Chartered Institute of Purchasing & Supply showing that their U.K. construction purchasing managers' index increased to 60.1 last month from a reading of 59.1 in January. Economists had expected the index to tick down to 59.0 in February.
The Australian, New Zealand and Canadian dollars were broadly stronger, with AUD/USD climbing 0.87% to 0.7833 and NZD/USD up 0.66% to 0.7561, while USD/CAD retreated 0.77% to 1.2442.
The Aussie found support after the Reserve Bank of Australia surprised markets on Tuesday when it held its benchmark interest rate at 2.25%, but signalled that rate cuts could be necessary in the future. Analysts had expected the central bank to lower borrowing costs by 0.25% this month.
Separately, the Australian Bureau of Statistics reported that building approvals increased by 7.9% in January, beating expectations for a 1.8% decline. December's figure was revised to a 2.8% drop from a previously estimated 3.3% slide.
In Canada, official data earlier showed that the gross domestic product expanded by 0.3% in December, exceeding expectations for a growth rate of 0.1% and following a 0.2% contraction the previous month.
Year-on-year, Canada's GDP rose 2.4% in the fourth quarter of 2014, compared to expectations for 2.2%. The third quarter's figure was revised to a an expansion rate of 3.2% from a previously estimated 2.8%.