[TOKYO] The dollar treaded water early on Tuesday, caught in a narrow range ahead of a series of US data releases later in the session, while sterling was on the defensive after downbeat UK data nudged it towards a 31-year low.
The dollar was flat at 101.250 yen after spending the previous day stuck between 101.460 and 100.870.
The euro was steady at US$1.1180, having scraped out a 0.2 per cent gain overnight. The dollar index was little changed at 95.641 after losing about 0.2 per cent on Monday.
The greenback was put on the defensive after weaker-than-expected US data on Friday dented prospects of a near-term rate hike by the Federal Reserve, with the resulting fall in Treasury yields pressuring the currency.
The markets will look to US data later in the day including consumer prices, housing starts and industrial output for another chance to gauge the health of the world's largest economy.
The dollar fared better against the pound, which has slid steadily on concerns that the economic fallout from Britain's decision to leave the European Union would keep the Bank of England stuck with an easier monetary policy indefinitely.
Sterling was effectively flat at US$1.2881 after slipping 0.3 per cent overnight in the wake of data showing prices of British homes for sale falling by their most in nine months in August.
The pound has inched closer to US$1.2798, a 31-year low struck in June after the Brexit referendum.
"The pound is likely to keep slipping towards US$1.2798 as the UK economy faces the risk of a downturn and amid the prospect of further easing by the BOE," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, who forecasts the pound to reach US$1.2000 by the year's end.
"Although unlikely, the British economy will have to avoid a recession for the pound to bottom out. But indicators now being released after the Brexit vote point towards a recession and the need for more monetary easing."
Investors will look to the British consumer prices data due later in the session for immediate incentives.
Commodity-linked currencies fared well thanks to a rise in crude oil prices.
The Canadian dollar was at US$1.2924 per dollar after touching a one-month high of US$1.2902 overnight. The Australian dollar was steady at US$0.7680 after gaining 0.4 per cent on Monday.