On Tuesday the dollar dropped to three-week lows against the yen, as fears over the
impact on global growth and inflation boosted safe haven demand.
The U.S. dollar index eased to 92.17, off the 12-year peaks of 92.76 scaled last week.
USD/JPY touched overnight lows of 117.74, the weakest since December 17 before pulling back to 118.39.
The yen received an additional boost after Japan’s Nikkei ended lower on Tuesday as markets re-opened after a public holiday on Monday.
Asian equities were boosted after Chinese trade data showed that exports rebounded in December, rising 9.7% but imports rose by a smaller-than-expected 2.4%, pointing to weak domestic demand.
The euro jumped against the dollar, with EUR/USD easing up 0.14% to 1.1848, but still remained close to last Thursday’s nine-year lows of 1.1753.
The single currency remained under pressure amid speculation that the European Central Bank will embark on full blown quantitative easing as soon as its next meeting on January 22.
Over the weekend, the governor of the Italy’s central bank warned that the euro zone is at risk of further deflation and said the best way to combat that threat is through purchasing government bonds.
On Monday crude oil prices fell to six-year lows, pressured lower by concerns over a global supply glut. The rout in oil prices has fuelled concerns of exacerbating already low levels of inflation in many major world economies, sending investors into safe haven assets.
