Dollar dips ahead of US inflation data, supported by rate outlook
TLT•Yen hovers near 40-year lows despite brief recovery
The euro EUR= was up 0.1% at $1.1396, while sterling GBP= rose 0.2% to $1.338.
Overnight currency volatility jumped, reflecting nervousness among traders. Overnight implied volatility for the euro EURONO=, which reflects demand to hedge against large, immediate swings in the currency, briefly topped 10% on Tuesday, something that has rarely happened since April.
The Japanese yen JPY= edged 0.14% higher to 162.24 per dollar on Tuesday, but was barely above 40-year lows, which kept traders on alert for signs of possible official buying from Tokyo.
The Japanese currency briefly strengthened following comments from Finance Minister Satsuki Katayama that Tokyo may consider adjusting state pension fund asset allocations if the environment surrounding asset management changed sharply.
Health Minister Kenichiro Ueno told a separate press conference on Tuesday that the ministry would examine reviewing the Government Pension Investment Fund's (GPIF) asset allocation if needed, but downplayed the prospect of any near-term changes.
